Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — RAILWAYS

Long-Distance Trains (Passenger Accommodation)

Mr. Frank Allaun: asked the Minister of Transport and Civil Aviation if he is aware that, despite complaints made eighteen months ago, second-class passengers on long-distance non-stop trains between Manchester and London and on other routes throughout the country are having to stand in the corridors while first-class seats remain vacant; and if he will reconsider giving the British Transport Commission a general direction to change this practice.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): This is a matter of day-to-day management for the British Transport Commission, and is not suitable for a general direction.

Mr. Allaun: Does the Minister remember telling me that if the ticket collector on a train found it grossly overcrowded he had a certain latitude of action? Will he therefore ask the Commission to tell the ticket collectors to use this discretion, and to seat standing passengers? This seems to be a sensible solution to the whole problem.

Mr. Nugent: My right hon. Friend did tell the House that ticket collectors have a certain discretion in the matter, but the use of it is really a matter for the commercial judgment of the Transport Commission, so that its service is attractive on the one hand and not extravagant on the other. I think that the Commission has been fairly successful in the past year, considering the improvement in the traffic receipts for passengers.

Scotland (Diesel Services)

Mr. Hector Hughes: asked the Minister of Transport and Civil Aviation what progress has been made under the capital modernisation programme approved by him in the transfer from steam to diesel engines on Scottish railways.

The Minister of Transport and Civil Aviation (Mr. Harold Watkinson): I understand from the British Transport Commission that since January, 1955, multiple unit diesel services have been introduced on six main line and five suburban routes, and experimental diesel rail bus services on two routes in Scotland. Diesel vehicles now provide about 16 per cent. of passenger train miles in Scotland. Further transfer to diesel traction is intended.

Mr. Hughes: Does not the Minister agree that those steps are quite inadequate to carry out what is said to be the policy of the Government, namely, to repopulate the north of Scotland and to bring industry there? Will he see that the essential electrification takes place in order to carry out what is said to be Government policy?

Mr. Watkinson: I do not agree with what the hon. and learned Member has said. In fact, Scotland has had exactly its share of dieselisation because the national figure is 16 per cent. No doubt schemes for electrification will be pressed forward, but that is not the Question which was asked.

Mr. Woodburn: Can the Minister give particulars of the success or otherwise of the portable electrical battery train which has been running?

Mr. Watkinson: I understand that it has brought a lot of passengers back to the railway but it is too early to say whether that will make it profitable.

Victoria-Walthamstow Tube

Mr. E. Fletcher: asked the Minister of Transport and Civil Aviation whether he will expedite the plans for the construction of the proposed new Victoria tube to serve North London.

Mr. Redhead: asked the Minister of Transport and Civil Aviation, in view of renewed public concern about traffic problems in London, whether he will now give an indication as to when he expects a start to be made upon the construction of the new tube railway, the Victoria line,


for which powers were conferred by the British Transport Commission Act, 1955.

Mr. Watkinson: This project raises difficult financial problems, and it has not been possible so far to find room for it within the British Transport Commission's total capital expenditure. I recognise, however, that it would make a valuable contribution to London travel, and intend to keep it under review with the Commission.

Mr. Fletcher: Is the Minister aware that his reply is very disappointing and very unsatisfactory? Is he aware that London Passenger Transport arrangements in North London are very unsatisfactory; that the delays on all the bus routes are increasing and that the real solution is the construction of this new tube from Victoria to Walthamstow? Does not the Minister think that so urgent a matter should be reconsidered and priority given to it?

Mr. Watkinson: Perhaps the hon. Member is unaware that it would cost £55 million and lose £3 million a year.

Mr. Ernest Davies: In view of the rising figures of unemployment and the unused capacity in the steel industry, would not it be worth considering the matter from the point of view of creating employment? Regarding the financial aspect, would not it be worth while for the Government to pay for the cost of constructing the tube and then hand it over to London Transport? Would not the cost of building be recouped in a few years in the form of savings caused by avoiding the delays which now cause so much loss?

Mr. Watkinson: None the less, it would still cost £55 million. The question to be decided, and upon which I wish to take the advice of the London Travel Committee, is whether this £55 million would pay a better dividend were it spent on off-street parking or some other project.

Mr. Redhead: As the Minister is proposing to seek the advice of the London Travel Committee, will he ask the Committee to give this project urgent and priority consideration, bearing in mind that the British Transport Commission gained its powers for the construction of this tube as long ago as 1955; and that the Commission has constantly

urged the necessity and desirability of this project to relieve the traffic problem?

Mr. Watkinson: I announced a week ago that the London Travel Committee has set up a sub-committee to deal with road problems in London and undoubtedly this will be one of the questions with which it will deal.

League Against Cruel Sports (Letter)

Mr. Chapman: asked the Minister of Transport and Civil Aviation what reply he has sent to a letter from the League Against Cruel Sports about the dangers to the travelling public occasioned by recent trespass of packs of dogs on railway lines.

Mr. Nugent: The reply to the League Against Cruel Sports stated that the question of trespass was a matter for the British Transport Commission to which the League's letter had been sent.

Mr. Chapman: Cannot it be made clear that, just as ordinary citizens would be prosecuted for trespassing on the railway line and holding up trains, so the hunt people will not be able to get out of it either? It is an exactly similar case, but similar action is not taken against people in the hunt.

Mr. Nugent: It is for the British Transport Commission to decide what action should be taken.

Oral Answers to Questions — TRANSPORT

Accidents (Comparative Death Rates)

Mr. Page: asked the Minister of Transport and Civil Aviation if he will give the comparative death rates associated, respectively, with making a journey by air, train, four-wheeled motor vehicle, motor cycle, pedal cycle and on foot.

Mr. Nugent: No reliable estimates can at present be made of the risk of travel by air, on foot or as a passenger in a motor vehicle or on a motor cycle. The Road Research Laboratory has, however, estimated the comparative death rates in Great Britain per 1,000 million miles travelled for drivers of four-wheeled motor vehicles, passengers by train, motor cycle riders and pedal cyclists. Its conclusions are contained in a research note which will be published in due course, and I will see that my hon. Friend has a copy.

Mr. Page: Is not it a fact that travel by motor cycle is about twenty-three times as dangerous as travel by car? Does not this sort of thing show that a new attitude is required towards safety? I congratulate my hon. Friend on the measures adopted, but could not he formulate some really effective campaign to deal with the dangers on the roads?

Mr. Nugent: We are just about to engage on the campaign for this year, and we are always glad of support from any quarter.

Vehicle Testing Stations

Mr. Page: asked the Minister of Transport and Civil Aviation how many applications he has received from commercial garages and local authorities, respectively, to have premises designated as vehicle testing stations; and how soon he anticipates that inspection of such premises by his technical officers will commence.

Mr. Watkinson: Up to 3rd February, 10,054 commercial garages and 20 local authorities had applied for appointment to undertake vehicle tests. Inspection of premises began in December and is continuing.

Mr. Page: Does my right hon. Friend realise that hon. Members on both sides of the House are anxious that vehicle testing should be brought into operation as soon as possible, as there has been such a long wait since the passing of the Road Traffic Act?

Mr. Watkinson: I agree with my hon. Friend. My Ministry is pressing on, and I am glad to say that applications are now coming in.

Mr. Strauss: Will the Minister go further? In view of the fact that hundreds of people are killed because of defective mechanism on cars, and because of the delay of three-and-a-half years before the operation of the scheme, he assure us that there will be no further postponement?

Mr. Watkinson: I do not think that there will be any further delay. We have cleared all the legal difficulties, and that was the great problem.

Road Safety (Pedestrians)

Sir F. Medlicott: asked the Minister of Transport and Civil Aviation if, with a view to facilitating the flow of traffic, he will consider adopting the system which has been used with success abroad whereby, in cities and towns and in other built-up areas, pedestrians are only allowed to cross the streets at junctions and at certain other specified points.

Mr. Watkinson: My hon. Friend's suggestion would require legislation. We will bear it in mind but I do not think it could be widely used in this country.

Sir F. Medlicott: Should not we have established by now the principle that, basically, the pavements are provided for pedestrians and the roads for vehicles? Would not my right hon. Friend at least consider trying this out as an experiment in some large city—preferably not Norwich?

Mr. Watkinson: I sympathise with the view of my hon. Friend about Norwich, because I think that one's opinion on this matter depends on whether one is a pedestrian or a motorist.

Mr. Gresham Cooke: While we all wish to see an increase in the flow of traffic, will my right hon. Friend bear in mind that it may mean having pedestrian crossings close together in order to assist pedestrians, particularly elderly people, or otherwise they may have to walk a long way to get across the road?

Sir F. Medlicott: asked the Minister of Transport and Civil Aviation if his attention has been drawn to the extent to which the flow of traffic in cities and towns is impeded by the manner in which pedestrians either ignore or seem unable to understand the working of traffic lights, and who make a habit of running or walking in the way of motor vehicles when the vehicles have the right of way; and what action is being taken to induce a greater amount of traffic discipline in pedestrians, both in the interests of motorists and of the pedestrians' own safety.

Mr. Nugent: The Highway Code advises pedestrians at a crossing controlled by traffic lights not to cross in front of traffic which has the signal to go; and under the Road Traffic Act, 1956, it is an offence for a pedestrian to disobey a direction from a policeman controlling traffic.

Sir F. Medlicott: Is my hon. Friend aware that, in fact, pedestrians, either wilfully or through carelessness, constantly disobey these lights? Is not it time that, in their own interests, some discipline was imposed upon them comparable with that imposed upon motorists?

Mr. Nugent: My hon. Friend's supplementary question follows the sense of the previous supplementary question addressed to my right hon. Friend. A large degree of co-operation would be needed from pedestrians in order to introduce further regulations at this stage. I am doubtful whether public opinion is ready for that.

Mr. Ernest Davies: Why cannot we follow the practice of America and many Continental countries, which have traffic lights for pedestrians with the road traffic lights saying "Don't Cross", or "Cross"? We seem to install these in very few cases in this country; could not there be a general extension of this system?

Mr. Nugent: We install with the "Cross Now" signal a separate pedestrian phase, where we think the weight of pedestrian traffic justifies it, but it means a complete hold-up for vehicular traffic and we are bound to use it rather sparingly.

Lorries (Sidelights)

Sir F. Medlicott: asked the Minister of Transport and Civil Aviation if his attention has been drawn, in the interests of road safety, to the need for large lorries and other vehicles of abnormal length to carry lights at the side; and if he will have this proposal examined.

Mr. Nugent: As I stated in reply to a Question by my hon. Friend the Member for Wembley, South (Mr. Russell) on 17th December last, we are already considering the introduction of regulations to require vehicles and combinations of vehicles exceeding a specified length to carry additional lights at the side. We shall circulate proposals to interested organisations for comment in the near future.

Sir F. Medlicott: Is my hon. Friend aware that a separate sidelight might be very valuable at night, because it is possible for a long vehicle to approach an intersection and to be invisible for some

seconds to traffic coming another direction?

Mr. Woodburn: Is the Minister aware that there was a terribly serious accident from this very cause in Glasgow the other day when three people were burned to death in a tramcar because, owing to the fog, the driver could not see a lorry backing into a side entrance. The lorry was right across the road. The tramcar smashed into the lorry and the people were burned to death in it. Is not it desirable, where this operation is taking place, that there should be sidelights to warn other traffic?

Mr. Nugent: I am glad to hear of this support for what would be a useful safety measure.

Driving Licences

Mr. John Hall: asked the Minister of Transport and Civil Aviation what saving in administrative and other costs would result if 50 per cent. of the driving licences issued were valid for a period of three years; and what saving would result if all driving licences were valid for three years.

Mr. Nugent: Since 1st September, 1957, when Section 48 of the Road Traffic Act, 1956, became effective, driving licences are being issued on a three-yearly basis, the process being spread to avoid overloading the issuing offices. During the twelve months ending 31st August, 1959, the saving in the cost of issuing these licences should amount to some £150,000; in subsequent years it should be twice as much.

Mr. Hall: Does not my hon. Friend agree that the purpose of imposing a driving licence fee is to cover administrative costs? From his Answer it would appear that there will be a further considerable saving by the issue of the three-year licence. Should not the benefit of that be passed on to the licence holder in the form of a reduced fee for the three-year period?

Mr. Nugent: The 5s. fee was fixed in the 1956 Act, and after due deliberation by this House it was decided that 5s. was the right level to keep it at. It is the level which has obtained since 1903. There is benefit under the three-year scheme in the convenience to drivers and a considerable administrative saving.

Cardiff Docks

Mr. G. Thomas: asked the Minister of Transport and Civil Aviation (1) what proposals the British Transport Commission are submitting to him under their modernisation programme in order to improve trade at Cardiff Docks; and whether he will make a statement;
(2) what decisions have been taken by the British Transport Commission concerning capital development in Cardiff Docks during 1959–60; and what capital advances he has authorised for carrying them out.

Mr. Watkinson: The British Transport Commission has submitted no proposals to me for further capital development in Cardiff Docks. I understand that it has no plans for such development in mind at the present time.

Mr. Thomas: Is the Minister aware that that unhappy position is causing considerable concern amongst all business interests in the City of Cardiff? Surely it is the responsibility of the British Transport Commission to have some plan for the future of this great port. At present it is being allowed to decay, and that is a monstrous thing.

Mr. Watkinson: I understand that the British Transport Commission has plans for developments at the South Wales ports, which have been announced. All I am saying is that the Commission has brought no further proposal forward to me.

Mr. Speaker: Mr. Woodburn.

Mr. Thomas: On a point of order—or, rather, two points of order. The first point of order arises from the fact that on these two important Questions you allowed me, Mr. Speaker to ask only one supplementary question. This is a matter of considerable importance for Cardiff. My second point of order is that I propose to give notice that I will raise this matter at the earliest possible moment.

Mr. Speaker: I do not know whether I need to answer the first point of order. The Minister said that he had received no proposals. The Question asked what proposals had bean made.

Transport Services, Scotland (Co-ordination)

Mr. Woodburn: asked the Minister of Transport and Civil Aviation how far arrangements are working to co-ordinate

the various road, rail, and sea transport services in Scotland; what regular consultations take place; and what general improvements have taken place.

Mr. Watkinson: So far as the services of the British Transport Commission are concerned, there is consultation under existing arrangements between managements, and the Transport Users' Consultative Committee for Scotland look after user interests. The Scottish Transport Council is also available to examine questions of general transport interest.

Mr. Woodburn: When the reorganisation of transport took place a good deal was said about the possibility of obtaining a comprehensive co-ordination of transport in Scotland among road, rail, ferry and other services. Has the Minister any information on how this is working?

Mr. Watkinson: I am sure that the right hon. Gentleman knows as much as I know, from his close contacts with Scotland—that these various bodies are doing a very good job and are trying to advance the cause which he recommends.

Mr. Hector Hughes: Is the Minister aware that this lack of co-ordination is particularly noticeable in the north-east of Scotland, where it is very prejudicial to trade and industry? Will he have particular regard to that area and see that the co-ordination is brought up to date?

Mr. Watkinson: I will certainly keep that point in mind.

Light Goods Vehicles (Speed Limit)

Mr. Chapman: asked the Minister of Transport and Civil Aviation what stage he has reached in his consultations with interested bodies about the possibility of raising the 30 miles-per-hour speed limit on light goods vehicles; and if he will make a further statement.

Mr. Watkinson: I am at present considering the comments I have received on this matter, but it may be some time before I have any further statement to make.

Driving Tests

Mr. Janner: asked the Minister of Transport and Civil Aviation the minimum number of the 250,000 people waiting for their driving tests he expects the first additional examiner, who is to take


up his duties during May, to examine in the course of a year from the date of his appointment; and when the other 199 examiners are to be appointed.

Mr. Nugent: Between 1,300 and 1,500 people, depending on weather conditions and the amount of training he needs. The remainder of these recruits will be appointed in a regular flow between May and September.

Mr. Janner: How does the Minister intend to cope with the 250,000 people by appointing only the number he has mentioned, with the remainder to be appointed in due course? How can he possibly deal with the number who want to be tested?

Mr. Nugent: We intend to appoint an additional 200 examiners during the summer months. I am confident that during the course of the summer and early autumn months we shall bring the backlog under reasonable control.

Mr. Strauss: In view of the enormous backlog, why the delay in appointing the additional examiners?

Mr. Nugent: The increase in applications for tests last year was more than we had expected. We estimated for a probable increase of over a quarter-of-a-million applications last year, which was more than a 25 per cent. increase. In fact, the increase was over one-third-of-a-million, 100,000 more than our estimate, and the result was that the blacklog built up in the way that it has.

Mr. Strauss: The hon. Member has not answered my question. Why the delay in appointing the new examiners? Why wait until September?

Mr. Nugent: We are appointing them now but the process of appointment takes a little time. In addition, they need to be trained. It will be impossible to get them actually into post until the beginning of May.

Mr. Gower: Is my hon. Friend satisfied that the present scale of salary is adequate to attract this number of men to do this important work?

Mr. Nugent: I think so. We have received 10,000 applications for the 200 places, so it looks as if it is.

Oral Answers to Questions — ROADS

Street Lighting

Mr. Page: asked the Minister of Transport and Civil Aviation if he will draw the attention of highway authorities in built-up areas to the reduction of pedestrian casualties which can be achieved by lighting their roads in accordance with the code of practice standard for traffic routes.

Mr. Nugent: Local authorities are responsible for street lighting and many of them are not highway authorities. I am sure that they are generally well aware of the value of good street lighting to road safety.

Mr. Page: Can my hon. Friend say how many local authorities adopt the code of practice in installing their lighting systems? Has not it been shown that if they do adopt that standard it saves numerous casualties on the roads?

Mr. Nugent: A high standard of street lighting is a very great aid to road safety. At present, we have no exact information on the subject, but we are in process of a national survey, and I hope that we shall have the information in due course.

Improvement Schemes, Newcastle-under-Lyme

Mr. Swingler: asked the Minister of Transport and Civil Aviation what proposals and schemes for the highways in Newcastle-under-Lyme he has under consideration in his Department which could be quickly started; and if, in view of the growing unemployment in the area, he will give them urgent attention.

Mr. Nugent: As we have said on a number of occasions, we do not intend to announce lists of schemes in particular areas which are under consideration. I cannot add, at present, to what we have already agreed for Newcastle-under-Lyme.

Mr. Swingler: Is not that a bad decision? Is not the Parliamentary Secretary aware that there is now nearly 6 per cent. unemployment in Newcastle-under-Lyme and an overwhelming need to stimulate demand for production from industry? Surely the time to take some of the schemes out of the Departmental pigeon-holes and apply them is now,


when there is labour willing to undertake the job?

Mr. Nugent: Newcastle-under-Lyme is not at present scheduled as an area for special treatment. If the hon. Gentleman wishes to broach that problem he should address a Question to my right hon. Friend the President of the Board of Trade. I must remind the hon. Member that at present we are engaged on a trunk road scheme in Newcastle-under-Lyme which is costing over one-third of £1 million.

Watling Street, Grendon (Service Road)

Mr. Moss: asked the Minister of Transport and Civil Aviation what progress has been made in making up the service road, Watling Street, Grendon, in the County of Warwick.

Mr. Nugent: The frontagers are responsible for making up this service road, but the county surveyor has been asked, as a first step, to work out an estimate of the cost for them.

Mr. Moss: While I appreciate the difficulties, may I ask whether the hon. Gentleman is aware that the road is at present ankle-deep in mud and that residents are denied access to their houses?

Mr. Nugent: I know that conditions are bad there, but I am afraid that that is not my responsibility. The hon. Gentleman can only press the local authority to get the county surveyor to get things moving.

Birmingham-Coventry Road

Mr. Moss: asked the Minister of Transport and Civil Aviation whether he has considered the problem raised by the intrusion of deer on the A.45 road between Birmingham and Coventry; and if he will make a statement.

Mr. Nugent: Inquiries have been made since the hon. Member wrote to me, but I can find no evidence that this is other than exceptional. I have written to the hon. Member setting out the matter at greater length.

Mr. Moss: While I am grateful to the hon. Gentleman for writing, may I ask whether he is aware that there was a collision on this fast double-traffic Birmingham and Coventry road between a new

Jaguar car and a deer, involving the owner in expensive repairs? Can the hon. Gentleman say what his responsibility is for motorways of this kind, and whether paragraph 5 of the Goddard Report of 1953 on civil liability for damage done applies in this case?

Mr. Nugent: This deer is of course spelt "deer" and not "dear". I have no responsibility in the matter. Questions on legal responsibility should be addressed to my right hon. and learned Friend the Attorney-General.

Frost Damage

Mr. E. Johnson: asked the Minister of Transport and Civil Aviation what reports he has received of damage by frost to any trunk or by pass roads completed during 1958, other than the Preston by-pass; and if he will state the date on which such roads were completed.

Mr. Watkinson: None, Sir, up to the present moment.

Mr. Johnson: Does my right hon. Friend think that the date of completion of a road or the weight of heavy traffic carried has any bearing on the likelihood of damage to the road by frost?

Mr. Watkinson: I think that is quite possible. My Answer was given as it was because, as I think my hon. Friend will know, most roads in that part of the world are still heavily frost-bound and it is difficult to give an answer.

Mr. Ernest Davies: In view of the public concern over methods of road construction following the closing of Preston by-pass, particularly after the hullabaloo which surrounded its opening, will the Minister reconsider his decision of last week not to appoint an independent committee of inquiry? Does not he realise that as Lancashire County Council and his Ministry are interested parties in this matter, it is desirable that there should be an independent inquiry into present methods of road construction?

Mr. Watkinson: I am sure the hon. Member will be glad to know that in the interests of the road programme the detailed investigation carried out in respect of the road showed that there was no failure in design or construction. Therefore, his supplementary question is not relevant.

Mr. Gresham Cooke: Is not it common on the Continent—on the autobahn and in Holland and other places—for new roads from time to time to be damaged by frost?

Mr. Chetwynd: They are not opened by the Prime Minister.

Mr. Watkinson: What my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) has said is perfectly true. On the whole, bearing in mind that Lancashire County Council is certainly not controlled by my party—.[HON. MEMBERS: "Oh."]—and I fully support the actions it took in pressing this road scheme forward, it would be better to keep a reasonable sense of proportion.

Mr. Strauss: Is the Minister aware that those responsible for the construction of the London-Birmingham Motorway claim that their method of construction precludes the possibility of any damage by frost? If so, why was not a similar method of construction used for the Preston By-pass? In the absence of an independent inquiry into this and all surrounding matters, not a single person in the country will believe the statement of the Minister that no one is to blame.

Mr. Watkinson: I think that is the personal opinion of the right hon. Member. As to the London-Birmingham road, it is Quite natural that in an early stage of a big road programme various methods of construction should be used. At least four or five different methods are being used at the moment all over the country. It is right that they should be as that is the only way in which we can adapt our construction to differing conditions of soil and climate.

Mr. Johnson: If it is correct that the new Birmingham-London Motorway will be clear of frost damage, is not it extremely satisfactory that we shall have constructed probably the only road in the world which is not subject to frost damage?

Mr. Watkinson: These matters are very technical and difficult to discuss by way of question and answer. All I say is that I entirely support those who have the courage to go forward with the road programme. Motor cars do not stop being made because it starts raining.

Northwich By-pass

Mr. E. Johnson: asked the Minister of Transport and Civil Aviation what reports he has received of damage by frost to the newly completed part of the Northwich by-pass; what further construction is to be undertaken in connection with this road; and when he anticipates that it will be started and completed.

Mr. Watkinson: I am advised that no frost damage has occurred on the western section of the Northwich by-pass, which was opened to traffic on 15th December last. The dualling of the existing trunk road A.556 immediately west of this new section of the by-pass will start next July and should be completed by about April, 1960. Constructional work on the eastern and final section of the by-pass—estimated at about £600,000—started on the 14th of last month and should be completed by about May, 1960.

Mr. Johnson: Is my right hon. Friend aware that, apart from the satisfactory nature of the first part of his Answer, the new by-pass has already brought immeasurable benefit to those travelling from west of Northwich to Manchester, and that the fact that he is pressing on with the remainder will be widely welcomed?

Mr. Watkinson: I thank my hon. Friend.

Wales

Mr. Gower: asked the Minister of Transport and Civil Aviation to what extent he will, in the next financial year, authorise a further increase in road construction, improvement and repairs in particular parts of Wales where unemployment is above the average level for the United Kingdom as a whole; what increased expenditure will be involved; and if he will make a statement.

Mr. Watkinson: It is not my intention to announce my detailed future plans in particular areas, and so, I am afraid, I have nothing to add to the Answer I gave to my hon. Friend on 19th November.

Mr. Gower: Has my right hon. Friend noted that in the interests of increased production in these areas the electricity industry is permitted increased expenditure? Cannot he take similar action?

Mr. Watkinson: I have not said I was not looking at the programme, but that at the moment I have nothing to add to the Answer I gave in November.

Mr. P. Morris: Is the right hon. Gentleman aware that if he is to increase the road construction programme in Wales, where the rate of unemployment is above the national average, it will mean the inclusion in his programme of road construction in every part of Wales?

Mr. Watkinson: I am sure that is what every part of Wales would want in any case.

London-Yorkshire Motorway

Mr. A. Roberts: asked the Minister of Transport and Civil Aviation what action he proposes to take to extend the London-Yorkshire motor road beyond the present determined point.

Mr. Watkinson: The difficulties of finding a satisfactory route for this motorway through Leicestershire have not yet been resolved and I cannot therefore yet say when I shall be able to publish a draft scheme for the northern section of the London-Yorkshire motorway. A line proposed by the Leicestershire County Council is being urgently examined in comparison with those previously put forward.

Mr. Roberts: Is the Minister really sympathetic, towards the idea that the projected motorway should go through Yorkshire, because it is apparent that there is more sympathy with the idea that it should go to the west of the Pennines rather than to the east?

Mr. Watkinson: I should sympathise with Yorkshire rather than with Lancashire, looking back to my origins, but I told the deputation from Yorkshire the other day that the difficulty of finding a line in Leicestershire was so great that we should certainly examine going ahead with the Yorkshire section independently of the southern section.

Traffic Lights

Mr. Janner: asked the Minister of Transport and Civil Aviation what changes he is contemplating in the traffic-light system during some parts of the night when there is very little traffic; whether he is aware that some countries have introduced at certain crossings a system of flashing lights which require a driver to slow down or stop to ascertain that the crossing is clear before proceeding across it; and whether he will

consider adopting this system in this country.

Mr. Watkinson: The answer to the last part of the Question is "No, Sir". With the vehicle-actuated traffic lights commonly in use in this country, delays at light-controlled crossings are reduced to a minimum. In many foreign countries traffic light signals are of the fixed-time type, which can cause appreciable delays unless the practice referred to by the hon. Member is adopted.

Mr. Janner: Is the Minister aware that a considerable amount of exasperation is caused to motorists who have their cars stationary in the middle of the night with no one about and no possibility of moving for many minutes, and that the introduction of this type of light would enable traffic to proceed and also avoid many cases of people crossing the lights?

Mr. Watkinson: I am not at all sure about that. The accident record at night shows that a common source of accidents is that caused by people jumping the lights at apparently free crossings and having head-on collisions.

Preston By-pass and Trunk Road (Accident Record)

Mr. Gresham Cooke: asked the Minister of Transport and Civil Aviation what information he has which would enable him to compare the accident record of the Preston by-pass and that of the trunk road through Preston.

Mr. Watkinson: Arrangements for the study of traffic behaviour on the Preston By-pass have been made between my Department, the Road Research Laboratory and the Lancashire County Council. This will enable comparisons to be made with the accident record kept for the trunk route through Preston.

Mr. Gresham Cooke: Will my right hon. Friend agree that the information up to date is that this road has had a very satisfactory accident record as compared with the old trunk road?

Mr. Watkinson: That is certainly true and, no doubt, when it is shortly reopened it will continue to have an excellent record.

Mr. McCann: Would not the Minister agree that the first accident happened to the road itself?

Parking Meter Schemes, London

Mr. Jay: asked the Minister of Transport and Civil Aviation what further steps he is taking to speed up the installation of parking meters by local authorities in London.

Mr. Watkinson: Under the Road Traffic Act, 1956, the initiative in proposing parking meter schemes rests with local authorities.
The Westminster City Council has now advertised and made application to me for a further Order covering the remainder of Mayfair. My statutory position is that the rate at which new parking meter schemes can be introduced must depend not only on the rate at which applications from local authorities are received, but on the consideration which must be given to the availability of off-street parking.

Mr. Jay: Is the Minister aware that most of my constituents travel by public transport and that, owing to indiscriminate free parking all over London, it is becoming impossible for buses even to draw into the kerb along many main roads? Cannot he do something more effective to enable public transport to operate?

Mr. Watkinson: A great deal has been done. We have started the parking meter system and it has proved to be a great success. As I have said, other schemes are now coming forward. In fairness to motorists and in order to keep the streets clear, these schemes must be balanced with more off-street parking.

Mr. Ernest Davies: While we welcome the fact that further schemes are coming forward, may I ask the Minister whether he can do something to speed up the procedure for dealing with these schemes and laying the Orders before the House? Does he recall that when the Road Traffic Act was before the House, we on this side criticised the very lengthy procedure now being put into force? Are not our criticisms proving correct?

Mr. Watkinson: I think that householders and occupiers of business premises must have the right to object if they think that a meter adversely affects their interests, and I would not be willing to take away that right.

Mr. Jay: Is not it clear from American experience as well as ours that we do not get off-street parking until we get parking meters?

Mr. Watkinson: I am afraid that is rather like the argument about the chicken and the egg; we have to have both.

Gower Street-Hampstead Road (Traffic Lights)

Sir L. Plummer: asked the Minister of Transport and Civil Aviation what progress has been made with the provision of traffic lights at the junction of Gower Street and Hampstead Road, London.

Mr. Nugent: We are having a careful study made of the causes of accidents over the past two years to determine what are the right measures to cope with this awkward and heavily-trafficked stretch of road. Traffic light signals will be considered but it is as yet by no means certain that they are the right answer.

Sir L. Plummer: Is the Minister aware that, roughly speaking, that is the answer which he gave me two years ago and that in the meantime the rate of accidents at this junction has increased? In view of the fact that this is a dangerous junction, will he make up his mind quickly about what he intends to do?

Mr. Nugent: I accept that the hon. Member asked a similar Question some eighteen months ago. In the last six months the accident record there has deteriorated and I have asked for an urgent report on the matter. I hope that I shall be in a position very shortly to decide what action should be taken.

Sir L. Plummer: Does the hon. Member mean that the number of accidents has increased?

Mr. Nugent: Yes.

Road Junction, Coleshill

Mr. Moss: asked the Minister of Transport and Civil Aviation whether a fresh study has now been completed of the junction of the A.446 and B.4117 roads at Coleshill, in the County of Warwick; what steps have already been


taken to improve the safety of this junction; and what is proposed to effect a permanent improvement.

Mr. Nugent: Yes, Sir. "Dual Carriageway Ahead" signs are to be installed soon and other signs will be altered slightly. The county council's opinion, which I share, is that these changes will be sufficient. The junction will, however, continue to be kept under observation.

Mr. Moss: Has the Minister departed from his former opinion that there was danger at this crossing? Is he aware that it looks like the Aegean Sea, because it has so many islands?

Mr. Nugent: It is one of these problem crossings. As the hon. Member knows, I inspected it myself, and I hoped that we could find a satisfactory solution, but I think that the present arrangement is about the best that we can make.

Motorways (Numbering)

Mr. Gresham Cooke: asked the Minister of Transport and Civil Aviation if he will explain the system of numbering to be adopted where there is more than one length of motorway running parallel to and attached to the same trunk road.

Mr. Nugent: Proposals on this matter are still being studied.

Road Programme

Sir W. Wakefield: asked the Minister of Transport and Civil Aviation the limiting factors in pushing ahead with the road programme, in view of the fact that earth-moving equipment and the men to operate it are available.

Mr. Watkinson: The broad level of the road programme is set by the general economic resources, but the most immediate limiting factor is unsuitable weather.

Sir W. Wakefield: Labour, equipment and materials are presumably all readily available. If that is so, is it not possible for the labour and the equipment which at present are idle and the materials which are available to be translated into money terms and used?

Mr. Watkinson: We are going forward as fast as the general economic resources will allow us.

Oral Answers to Questions — CIVIL AVIATION

Royal Dutch Airline (Singapore Service)

Mr. Rankin: asked the Minister of Transport and Civil Aviation why it has been decided to reduce the number of flights to Singapore by the Royal Dutch Airline from two per week to one.

Mr. Watkhison: The Royal Dutch Airline, KLM, was given rights at the end of 1957 to operate services terminating at Singapore on the clear understanding that these were a temporary concession to help it during the Indonesian crisis. The decision to reduce the service to one flight a week was taken last March and should have come into effect in September, but in response to representations from the Netherlands Government there have been successive deferments during which the question has been reviewed in considerable detail with the Netherlands authorities. The decision to reduce the frequency was in full accordance with the well-established international practice for the grant of traffic rights to foreign airlines, but in response to further representations by the Netherlands, we propose to have another discussion with them on the technical aspects of the decision.

Mr. Rankin: Can the right hon. Gentleman say what were the reasons advanced by the Dutch Government which caused the Government to delay the final decision?

Mr. Watkinson: Naturally, we do not wish to fall out with our good friends. They said that there appeared to be a discrepancy in the figures which each side was using and we are endeavouring to get agreement on what are the figures.

Sir A. V. Harvey: Will my right hon. Friend bear in mind that relations between countries have a great effect on arrangements made for international airlines and, in view of the arrangements between the five continental airlines which may come about, will he be generous to our old friends, the Dutch, in reviewing this matter?

Mr. Watkinson: I think the House should realise that we are being generous because, whatever happens now, the Dutch will get a terminating service which is very valuable, and something they never had before.

Prestwick Airport (Reconstruction)

Mr. Rankin: asked the Minister of Transport and Civil Aviation whether he has noted the decision of Ayrshire County Council not to co-operate in the reconstruction of Prestwick Airport; and what effect he estimates that this will have on the reconstruction programme.

Mr. Watkinson: I have noted the resolution with great regret. I realise the disappointment of the council that, for reasons which I have fully explained to it, I cannot agree to a tunnel. I still hope that on further consideration the council will be prepared to co-operate with my Ministry. I am sure that we are all agreed that the development of the airport must go on, and meantime it will be necessary to continue the present unsatisfactory road crossing of the runway. I am determined in any event that the runway extension must be ready in time for the big jets.

Mr. Rankin: While appreciating that, may I ask whether the Minister realises that the resolution of the Ayr County Council is a measure of the dissatisfaction of the council with the Minister's decision on the road diversion, and that the dissatisfaction is felt largely throughout Scotland? In view of the importance of Prestwick Airport particularly in fog periods, is not it regrettable that the right hon. Gentleman is spending so little upon its development?

Mr. Watkinson: I am surprised that the hon. Gentleman, who takes a deep interest in this matter, has not considered the fact, which is I think also generally accepted in Scotland, that, whatever the past may have been, to dig a long, deep tunnel under the runway now would mean that the last sentence in my Answer could not be carried out, because the runway would not be ready in time.

Sir T. Moore: If there is to be all this trouble because of the short-sighted policy of the Ayr County Council, might not it be better to leave the road over the runway as it exists at present and rely on the proposed by-pass between Prestwick and Ayr to take the main traffic?

Mr. Watkinson: I think the new by-pass will give great relief. I have said that I have no option at the moment but

to continue the very unsatisfactory business of having people walking over the main runway. We have to realise that it is too late both to have the runway ready for the big jets and to conduct a major tunnelling operation.

Mr. Emrys Hughes: In view of the unsatisfactory nature of that reply, I give notice, as one of the Members for Ayrshire, that I will raise the matter on the Adjournment.

Southampton Airport

Mr. J. Howard: asked the Minister of Transport and Civil Aviation when consultations took place with the operators using Southampton Airport concerning the transfer of traffic to Hurn Airport; and what proportion of the operators were in favour of the transfer.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. John Hay): The principal operators using Eastleigh attended two meetings held by my predecessor in November, 1957, and April, 1958, to discuss the future of the airport. None of them favoured the transfer, but they accepted that if Eastleigh were not provided with a hard runway, some, if not all, of its services would have to go elsewhere, and that Hurn was the only feasible alternative.

Mr. Howard: Can my hon. Friend tell me whether the operators mainly concerned with expressing that view were those of the nationalised airlines, such as B.F.A., or were independent operators?

Mr. Hay: The nationalised undertaking, B.E.A., which is one of the operators, expressed that view and so did two other of the three independent operators.

Decca Air Navigation System

Mr. John Hall: asked the Minister of Transport and Civil Aviation if he is aware that attempts are being made to prohibit the use of British navigational aids in aircraft and ships using airfields and ports outside the United Kingdom; and what steps he is taking to ensure that the most efficient navigational aids may continue to be used.

Mr. Watkinson: Where British navigational aids are the best, we take every available opportunity to prove their merits and advocate their adoption.


Recently special Comet flights have demonstrated the Decca air navigation system at London and Paris. These will be repeated at New York and at Montreal, where our delegation will strongly advocate its adoption as an international standard short-range air navigation aid at the forthcoming I.C.A.O. Conference.

Mr. Hall: Is it a fact that, despite whatever decision may be taken at the International Civil Aviation Organisation Conference, the Americans may insist upon the use of their own system of navigational aids throughout the United States? If that is so, will not that result indirectly in prohibiting the use by British and other airlines of the British system in their planes, although it is both safer in operation and cheaper to install? If this is correct, is not this an example of the worst kind of pressure tactics which is likely to do considerable harm to Anglo-American relations?

Mr. Watkinson: I think that the British delegation will go to Montreal ready to set out quite clearly what we believe to be the very great technical advantages of this system. I very much hope that the decision will rest on the technical merits and not on any other consideration.

Mr. P. Williams: asked the Minister of Transport and Civil Aviation what action he is taking, other than at the forthcoming International Civil Aviation Organisation Conference in Montreal, to promote world-wide acceptance of the Decca-Dectra navigation system.

Mr. Watkinson: Members of I.C.A.O., and the international airline and pilots' associations, have been told that the U.K. will advocate the adoption of Decca at the Montreal Conference as the standard short-range air navigational aid. The reasons why this is the best choice have been explained widely on all available occasions. A Comet 2E has demonstrated Decca at London and Paris, and will do so at New York and Montreal. Dectra is a long-range system still being evaluated, but recent trials over the North Atlantic have been most promising and have gained much international interest.

Mr. Williams: I thank my right hon. Friend for that answer, but is he aware of reports in all sections of the Press exposing American action in the way

that they are trying to suborn the allegiance of other national airlines and prevent the British system, which is better, cheaper and more efficient, from being adopted at the conference, and what action is he taking to try to prevent this American subterfuge?

Mr. Watkinson: I think that first we had better have the conference. As I said in a previous Answer, our team will go there ready to set out quite fairly and factually what we believe to be the undoubted technical advantages of this method. No doubt the Americans and others will put the counter-case. All I am saying at the moment is that we certainly expect that decisions will be taken purely on the proper technical grounds. If they are not, that is another matter which we shall be prepared to look at again.

Mr. Farey-Jones: Pending the result of the conference, will my right hon. Friend give an undertaking that at least British and Commonwealth airlines will not be compelled to accept a completely inferior system?

Mr. Watkinson: After the conference there will have to be further discussions, but pending it no final decision can be taken.

Turnhouse Airport

Sir W. Anstruther-Gray: asked the Minister of Transport and Civil Aviation whether he is aware that during the last twelve months there have been several occasions on which aeroplanes, booked for Turnhouse, but delayed en route, have been refused permission to land after 10 p.m. because of lack of staff, and that they have, instead, been diverted to Prestwick or Renfrew to the great inconvenience of passengers; and what steps he is taking to make it possible for aircraft to land at Turnhouse after 10 p.m.

Mr. Hay: Yes, Sir. Since 1st January, 1958, four aircraft have been diverted from Turnhouse because they would have arrived after the normal hours of operation. I have consulted my right hon. Friend, the Secretary of State for Air, and while unfortunately no immediate improvement is practicable, the possibility of the airport being taken over by my Department is being examined as a matter of urgency.

Sir W. Anstruther-Gray: While thanking my hon. Friend for that encouraging reply, may I ask him to bear in mind that the proposal for taking over the aerodrome by his Department is undoubtedly a right solution to this problem? Will he press it forward vigorously?

Mr. Hay: Yes, Sir.

Mr. Woodburn: Is the hon. Gentleman aware that 10 o'clock at night gives a margin of only about half an hour for the arrival of the main evening plane from London, and it has struck Scottish people as being quite fantastic that in a major airport of this kind the regulations mean that after 10 o'clock aircraft cannot land. I hope that in the interregnum the hon. Gentleman will make arrangements with his right hon. Friend so that the Air Force will see that this place is properly staffed.

Mr. Hay: These difficulties arise because we have to share with the Royal Air Force, but it is fair to say that the Royal Air Force has often been most helpful in providing staff long after 10 o'clock at night and every effort is made to see that the inconvenience is minimised. We shall get on with the job as quickly as we can.

Mr. Woodburn: Is the hon. Gentleman aware that it has struck people as rather unusual that the Air Force should watch so strictly the time schedules? We never understood that the Armed Forces had an eight-hour day and five-day week to that extent.

Mt Hay: I think it is right to say in their defence that frequently they work considerably after 10 o'clock at night. Since 22nd September the airport has remained open after 10 o'clock on thirteen occasions to serve civilian traffic.

Yeadon Airport

Mr. A. Roberts: asked the Minister of Transport and Civil Aviation what applications he has had from the Corporations of Leeds and Bradford for financial support for their own airport, so that provision can be made for the airport to be used by jet aircraft; and the nature of his reply.

Mr. Hay: We have had no such applications.

Mr. Roberts: If applications do come, will the Minister view them favourably, bearing in mind that he is the Minister of Civil Aviation and that three million people object to being taken over the Pennines to Manchester?

Mr. Hay: If any application were made it would, of course, be very carefully considered; but I must point out that airport owners are normally expected to meet the cost of developing their airports without Government grant.

Fog Dispersal

Mr. Russell: asked the Minister of Transport and Civil Aviation the prospects of installing fog-dispersal equipment at London Airport, even on a limited scale; what views have been expressed to him about this by airline operators; and if he will make a statement.

Mr. de Freitas: asked the Minister of Transport and Civil Aviation what research he is undertaking into fog dispersal; and how far in this research he is co-operating with the Secretary of State for Air and the Minister of Supply.

Mr. Hay: Research carried out by the Ministry of Supply indicates that the most promising method of fog dispersal is the thermal one known as F.I.D.O. We are therefore collaborating with the Ministry of Supply in tests with a new type of F.I.D.O. installed for this purpose at an R.A.F. aerodrome. This is a high pressure system with a new type of burner which it is hoped will be more economical in operation.
No views on F.I.D.O. have been expressed to us by operators within the last two years. It would he premature to make a statement until the trials have been completed and the results studied in consultation with the airlines likely to be concerned.

Mr. Russell: Can my hon. Friend give details of the cost of this new system of operation and, if it is expensive, is there any hope at some time in the future of atomic energy coming to the rescue?

Mr. Hay: I should like notice of the last part of my hon. Friend's supplementary question. The purpose of this experiment is to see whether we can achieve a more economic system than the old one. I would hesitate to say


anything to the House other than that it is a pretty expensive form of fog dispersal.

Mr. P. Noel-Baker: While it may be expensive, has the Minister made any estimate of the loss to airlines and to passengers as a result of fog in recent weeks? Is not that a vast sum?

Mr. Hay: The hon. Member for Govan (Mr. Rankin) has a Question on the Order Paper about loss to airlines. We believe that British European Airways calculates that it has lost about £200,000 recently. The F.I.D.O. system, I would emphasise, is extremely expensive both to install and to operate.

Mr. Beswick: Is the hon. Gentleman aware that this answer is precisely the same as that given over the last four or five years? May I ask whether it is a fact that we still look to F.I.D.O. as being the aid for landing in fog or whether there is the possibility that automatic landing equipment will be the solution to the fog problem?

Mr. Hay: I do not think that automatic landing equipment will be the complete solution because, although it will bring aircraft down on the runway and continue for a certain distance, and although F.I.D.O. can provide a clear area, there still remains the problem of the wall of fog into which the aircraft would have to run before getting to the apron.

Mr. de Freitas: When the hon. Gentleman says he has had no report from or any contact with operators, is this because he has not asked them or got in touch with them?

Mr. Hay: I meant that we have had no contact with the operators in respect of estimates of loss as a result of fog. We certainly have constant consultations with them about these methods of fog dispersal.

Air Corporations (Subsidiary Companies)

Mr. Beswick: asked the Minister of Transport and Civil Aviation to what extent he requires fees and other payments made to directors and chief executives of subsidiary companies of the airline Corporations to be submitted to him for approval; and if he will issue

a general direction requiring these payments to be published.

Mr. Watkinson: I have no statutory responsibility for the appointment of directors and chief executives of subsidiary companies of the air Corporations, and have no power to require that the amount of their remuneration should be submitted to me for approval. The answer to the second part of the Question therefore is, "No, Sir."

Mr. Beswick: Would the Minister regard this as satisfactory accountability to Parliament of these companies? Is he aware, for example, that it is believed that in one case the payment of something of the order of £80,000 was made to a non-United Kingdom director or chief executive; and if a payment of this kind was made, does he mean to say that it does not appear in the accounts that are made available to Parliament?

Mr. Watkinson: If the hon. Gentleman has any particular case he would like to put to me, I will look at it. I have given him a general answer on policy. That has always been the continuing policy and I think it perfectly correct.

Mr. Popplewell: Would the Minister and the Leader of the House have another look at this matter, because there are a number of such people appointed? We are supposed to have public accountability, and it seems rather a shield for the Minister to protect himself by saying that it is the duty of the Corporations to make appointments. The House should know what is being paid for this type of appointment.

Mr. Watkinson: As I have said, I have no power or status in the matter at all.

Airline Pilots (Recruitment)

Mr. Beswick: asked the Minister of Transport and Civil Aviation how many organisations have submitted proposals for the ab initio training of pilot cadets in connection with the scheme for the recruitment of airline pilots; if any decision has yet been made about the allocation of a contract for such training; and what was the estimated cost, per cadet, in the accepted proposal.

Mr. Hay: We have had suggestions from five organisations about the scheme within the last year. We have also considered other ideas. While we are not


yet ready to make a considered statement, I can say it is unlikely that the Government would be able to favour the system of training by contract.

Gatwick Airport (Continental Services)

Mr. Chapman: asked the Minister of Transport and Civil Aviation arising out of his consultations with the operators concerned, if he will now state when it is proposed to start some air services to Paris and other Continental capitals from Gatwick Airport.

Mr. Hay: The transfer to Gatwick of some Paris services from London Airport is being considered; but I am not yet able to say when the move will take place.

Mr. Chapman: As Gatwick seems to be more often fog-free and as, secondly, it would help many people living in south London and south-eastern England if they could travel direct to Gatwick instead of having to come to London and then to go out to London Airport, would not it be a good thing to hurry this up?

Mr. Hay: Yes, but people go to Paris from north-west London and north London, as well as from the south-east and south London. In any event, this is a matter not for my right hon. Friend but rather for the airlines concerned.

PRIME MINISTER AND MR. KHRUSHCHEV (LETTERS)

Mr. Emrys Hughes: asked the Prime Minister the precise terms of his recent message to Mr. Khrushohev congratulating him on the success of the recent Russian rocket.

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): I have been asked to reply.
With permission, I will circulate the text of my right hon. Friend's message, together with that of Mr. Khrushchev's reply, in the OFFICIAL REPORT.

Mr. Hughes: Is not the right hon. Gentleman aware that I would not dream of embarrassing the Prime Minister by asking him when he is likely to go to Moscow, but if by accident he should arrive there, will he keep in mind that it is now stated to be possible to land these rockets in any part of the world? Will

the Prime Minister do his utmost to see that some agreement can be reached which will save both London and Moscow?

Mr. Butler: I cannot describe the likely journeys of my right hon. Friend, but he will always take the best possible means of transport. I will certainly bring the hon. Gentleman's advice about the rocket to my right hon. Friend's attention. I am glad to see that it is one of the hon. Member's new interests.

Following is the information:

Message from the Prime Minister to Mr. Khrushchev dated January 3, 1959:
Please accept my congratulations on an outstanding achievement. It will, I am sure, make an important contribution to man's scientific knowledge. British scientists join me in congratulating their Soviet colleagues and all those concerned in this project.

Reply from Mr. Khrushchev to the Prime Minister dated January 19, 1959:
Accept my gratitude for your kind congratulations on the occasion of the successful launching of the Soviet cosmic rocket. I also express gratitude to the British scientists who have congratulated the Soviet scientists and engineers and workers who realised this scientific-technical achievement for the purposes of acquiring knowledge about the universe.

QUESTIONS TO MINISTERS

Mr. Hayman: Mr. Speaker, may I ask for your guidance? The Minister of Transport has replied to Questions today almost throughout Question Time but, even so, he has answered only 44 out of 86 Questions on the Order Paper. The last occasion on which he had a fair share of the time was 12th November. There is a great need for Questions, particularly those affecting the West of England, to be ventilated. Is it possible for some adjustment to be made in the Minister's timetable?

Mr. Speaker: That is not a matter for me. We had some very long supplementary questions today.

BUSINESS OF THE HOUSE

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): Mr. Speaker, I have a short statement on business.
The right hon. Gentleman the Member for Huyton (Mr. H. Wilson) drew attention last night to the fact that there were


no copies available in the Vote Office of the White Paper relating to the European Monetary Agreement, signed in Paris in 1955. Copies of this White Paper have now been made available in the Vote Office and I regret that they were not there earlier.
We hope that it will be agreeable to the House to take the Committee and remaining stages of the European Monetary Agreement Bill tonight. As the House is aware, we did not proceed with the Bill last night following an amicable arrangement which was made across the Floor of the House.

BALLOT FOR NOTICES OF MOTIONS

Royal Commission on Common Land (Report)

Mr. Redhead: I beg to give notice that on Friday, 20th February, I shall call attention to the Report of the Royal Commission on Common Land, and move a Resolution.

Police, England and Wales (Select Committee's Report)

Mr. John Hobson: I beg to give notice that on Friday, 20th February, I shall call attention to the Report of the Select Committee on Estimates on the Police in England and Wales, and move a Resolution.

Industrial Buildings, Lancashire and Yorkshire

Mr. Rhodes: I beg to give notice that on Friday, 20th February, I shall call attention to the need to demolish old and derelict industrial buildings in Lancashire and Yorkshire, and to replace them with new buildings for new industries, and move a Resolution.

BILL PRESENTED

INTERNATIONAL BANK AND MONETARY FUND

Bill to enable effect to be given to proposed increases in the quotas of the International Monetary Fund and in the capital stock of the International Bank for Reconstruction and Development, presented by the Chancellor of the Exchequer; supported by the Prime Minister, Sir David Eccles, Mr. Maudling, and Mr. Erroll; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 63.]

BUSINESS OF THE HOUSE

Proceedings on the European Monetary Agreement Bill exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[Mr. R. A. Butler.]

Orders of the Day — HOUSE PURCHASE AND HOUSING BILL

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

Orders of the Day — Clause 1.—(APPROVAL OF BUILDING SOCIETIES FOR INVESTMENT BY TRUSTEES AND GOVERNMENT LOANS.)

3.34 p.m.

The Chairman: I think that the first two Amendments, in the name of the hon. Member for Coventry, South (Miss Burton), those in page 1, line 7 and line 8, can be taken together.

Miss Elaine Burton: Yes, Sir Charles.
I beg to move, in page 1, line 7, after "Where", to insert:
the Minister is satisfied that a permanent building society does not discriminate between borrowers or prospective borrowers according to their sex and".
On 12th November last, a statement appeared in The Times of which I wish to read two paragraphs, as they are both relevant to today's discussion—and I think that the Minister of Housing and Local Government knows which paragraphs they are. The statement read:
A spokesman of the Building Societies Association, whom the Government consulted in framing their plans, admitted yesterday that, although there is no hard and fast rule prescribed in building society practice, women are discriminated against simply because they are reckoned to be less credit-worthy.
The societies argue that a man's future can be predicted with more certainty over a long period of years than a woman's.
I do not think that I can accept that, Sir Charles. The statement went on to say:
If a woman in search of a mortgage is young the society must take account of the fact that she may soon change her circumstances by marriage, when the husband will not be legally liable for repaying the loan. If she is less than young the society must bear in mind that she may retire, even from a well-paid job, earlier than a man.
It seems to me that these conditions apply against the young and the not so young, the married and the single, and the type of woman who would be liable to be exempted from them quite escapes my comprehension. As may well be imagined, such a shocking statement caused considerable interest and surprise.

It caused a good deal of publicity in the local and in the national Press, but it was not until 10th December—four weeks later—that there appeared in The Times a letter from the Secretary of the Building Societies Association denying that that statement was accurate. That was a remarkably long time-lag for so important a statement to be denied.
I was not made aware of the Building Societies Association's denial of any part of the statement until about three weeks after 12th November. That was as a result of a letter I sent to the Association. Otherwise, I imagine that I would not have known about the matter at all.
I wonder whether, at this stage, the right hon. Gentleman could help me. I know that it was not his statement—and, of course, he is very glad that it was not—but I did see him after the December debate, when he was most courteous and helpful in listening to the points that I had to make. The question of whether or not the spokesman of the Building Societies Association did say to The Times, for its statement of 12th November, that women were "discriminated against" is important. Perhaps the right hon. Gentleman could tell the Committee now whether he believes that the Association still stands by the fact that it did not use those words, and that The Times was in error. I shall be much obliged if he could comment on that point.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke): I think that any reply should be given after the case for an Amendment has been put. Be that as it may, neither I nor the Building Societies Association can, I think, be held responsible for a report in a newspaper—even one as reputable as The Times—which was based on a verbal statement of which there is no record. Later in the debate on the Amendment, I shall be able, on behalf of the Government, to give the official views of the Association on the matter.

Miss Burton: I thank the right hon. Gentleman for that statement. It does not get us a great deal further, of course. I think that I know the official views of the Association—I have read them—but the evidence I have to put forward does not exactly bear them out.
If one accepts the statement contained in the letter of 10th December from the Secretary of the Building Societies Association, the words "discriminated against" were not used. If we take those out, we are still left with the fact that, although it is not prescribed building society practice, women are reckoned to be less creditworthy. I do not know whether the Secretary of the Association wishes also to withdraw that statement. If he does, I can only say that The Times must have been very lax that day and will not have much left of the report of the interview which took place.
The question whether building societies do reckon that women are less creditworthy than men is of great importance. The suggestion is really so ridiculous that I think the best thing is to try to kill it by ridicule, which is always the best way of killing anything in this country. It is no use being angry. One can only be sorry that such out-of-date ideas exist.
The Building Societies Association, through its Secretary, has said—this was in The Times of 10th December—that
… the policy of most of its members is to treat a woman applicant for a loan in exactly the same way as a man if she is in regular employment and earning a sufficient income. In such cases there is no discrimination on grounds of sex and no male guarantor is normally required".
That is obviously what everybody would expect. The only comment I have is that every single case which has come to my notice, from every part of the country, has arisen over the requirement for a male guarantor.
I did not myself hear it, but I gather that, in an "Any Questions" programme at the beginning of December, after we had tried to air this matter in the House by a deferred Question, members of the panel, four men, were asked about this and were quite horrified that, in these modern days, such antiquated ideas should exist. They hardly thought it possible. The following week, which was the week beginning 7th December, I think, in the "Any Answers" programme, it was said that a great many women had written to the B.B.C. giving their names and addresses, all of them saying that they had been asked for male guarantors. It seems that we cannot quite agree with the statement of the Secretary of the Building Societies Association.

That is why I have moved the Amendment.
After the preliminary account in The Times, and the publicity given to it in the Press, without my seeking it at all, certain enterprising journalists and other people began to make inquiries in all parts of the country and even in Northern Ireland to find out whether I was on a winner or a loser. It was extremely interesting to read in the Press, as I did, that, for instance, estate agents in Belfast who had been questioned on these matters all agreed that there was a good deal in the contention I was making that women were discriminated against simply on grounds of sex when they applied for mortgages.
The National Union of Women Teachers felt very strongly on the matter and said that a good many of its members in regular employment and guaranteed jobs had been refused mortgages without a male guarantor. The Birmingham and District Property Owners' Association, through its Secretary, Mr. Wilson, whom I do not know at all, said the same, as did the Birmingham women's organisations. I am sure that all right hon. and hon. Members will agree that this is not a party matter. If all these different sources agree, there must be something in it.
Apart from those general inquiries, which, as I said, I did not set on foot, I myself approached business and professional women's organisations. I asked them to comment on the matter and to give me examples. They have done so, and I laid the information before the right hon. Gentleman in the last debate, going to see him afterwards to give him the details. Since then, a good deal more has come to my notice. I do not propose to weary the Committee by going over every detail of what I said on the last occasion, but I should like to put before it certain examples which indicate the state of affairs which exist. I put them under the heading—which is not of my making but which, I think, cannot be bettered—"No man, no money".
My first example, which I am sure nobody will defend, concerns a single woman, in the north of England, teaching in a permanent post and receiving the maximum salary. When she asked for a mortgage, the building society insisted that she should have the support of a man's


signature. What made her so angry, apart from that, was that it did not seem to matter whom she asked, what he did or what money he was earning, because he would have no financial liability at all. Even if she died before he did, he had no liability to carry out the agreement. It was simply that a male signature had to be given. I submit to all right hon. and hon. Members, wherever they may sit in the Committee, that that really is ridiculous.
3.45 p.m.
Next, I will give the example of a widow who holds a senior executive position as an office manager. This woman approached a building society for a mortgage. She was very skilled in the details of the matter, for she explained to me how she was within the creditworthiness—a horrid word—demanded by that society. A person has to earn enough money per week to be able to meet the outgoings called for by the mortgage, and she was within that requirement. Also, she had references from her employers and references from her hank manager as to her financial status. She was told by the building society that she could not have a mortgage without a male guarantor. In fact, she was told that it was no use her even filling in an application form.
I was cheered, when I mentioned this matter in the House on 15th December last, to find that the hon. Member for Orpington (Mr. Sumner) agreed with what I said and added that he himself had met this particular difficulty in regard to young widows. Only last night I received a letter from a widow, and I should like to read what she says, because it shows the general trend:
I am a widow, 55 years of age, and, on my husband's death nearly five years ago, I returned to the teaching profession. Now I have become a victim of the Rent Act and, as the tenant of a decontrolled house in which I have lived for 23 years, I have had to make efforts to find other accommodation. One of the obstacles has been the unwillingness of building societies to grant a mortgage. My age, of course, is a stumbling block, but I was told repeatedly that, as I was in a pensionable job, a mortgage could probably be arranged but I should have to find a male guarantor.… I thought that, in view of the debate in the House this week, you might be interested in one more confirmation of your contention.
Having dealt with the single woman and the widow, I come now to the last

category, if I may call it that, the married woman. I will cite two examples. The first concerns a woman who applied to three building societies, each of which refused to grant her a mortgage without her husband as guarantor. She says—I should have thought that this was justified—that, as the house was being built with her money and as the leasehold was in her name, such a requirement seemed unfair and unreasonable. I am sure that hon. Members would agree with that.
Since the last debate, I received a short letter from a married woman who was in receipt of a four-figure income. She wanted to raise a £1,000 mortgage on a cottage worth just under £2,000, which would seem to be a relatively safe low percentage loan. She says:
At the time, I was earning a four-figure salary with a number of additions including a guaranteed bonus.
This woman approached a building society which would grant the mortgage only with a guarantee from her husband, a freelance commercial artist then living in a strange district and having no immediate prospects of any kind of earned income. I submit that in this year 1959 that is quite indefensible.
I have also had some advice about the Married Women's Property Act. I do not intend to venture far into those dangerous waters, but I was told that when inquiries were being made among estate agents in Belfast one or two who wanted to find a reason for this discrimination trotted out the old excuse of the provisions of that Act. Of course, that horse will not run, because I think that the Married Women's Property Act specifically permits a married woman to enter into contracts to the extent of her separate property, and an earned income of her own must be presumed to count as separate property. So we can get that one out of the way altogether.
I hope that I have been able to convince both sides of the Committee on this Amendment. As a result of publicity, debates in the House, discussions on the B.B.C. and on television, more and more letters and more and more complaints are coming in. I am sure that the Minister knows that they are not all from people who share my political views. I received a letter this morning from a woman who started by saying that she was a Conservative. She went on to state


what she said about the Conservative agent who had called and with whom she had raised these questions.
There is in the country on the part of single women, widows and married women an absolute conviction that discrimination is shown by some building societies. I wish to be fair and I am prepared to concede that in some cases it may be on the part of the headquarters of the building society. Equally, I think that it occurs in branches of the building society where the local manager has got a bit above himself and interpreted these matters in a way which he should not have done.
I hope that the right hon. Gentleman will be able to accede to our Amendment. In view of what I have put forward, it is not the slightest use the Building Societies Association saying that this discrimination does not exist. It does exist, and I have proved it. However, that is beside the point. Equally, I do not think that it is any use the Association going on to say that it will in future investigate any cases brought to its notice.
A great many people whose cases I have not quoted in the House have written to me in a private capacity. Some of them live in small towns and have been most anxious that their private affairs should not be discussed. That is very right and proper. I am sure that a number of them have no desire, should they be turned down in future, to have all the details thrashed out in public. As the Bill proposes that taxpayers' money should be used for this purpose I am convinced that there is not a single hon. Member who would not agree that taxpayers' money should be used for the benefit of all taxpayers, irrespective of sex. That makes sense.
I have given some more examples in addition to those which were given on 15th December. I ask the Minister to help us because this is not only a case of justice being done. It is a case of justice being seen to be done. Although the White Paper talks about the building societies granting loans to any creditworthy person, many women have no faith in the Building Societies Association whatsoever when it comes to creditworthiness. We therefore ask the Minister to accept the Amendment.

Sir Herbert Butcher: The hon. Lady the Member for Coventry, South (Miss Burton) always moves Amendments in a most agreeable manner, and I should like to compliment her on her speech. I regret, however, that she did not make the background as clear as she might have done.
I speak as a director of a building society, and I say to the hon. Lady that she must view the problem in the light of the circumstances which have been obtaining for many years, namely, that building societies have been unable to meet the demands made upon them from borrowers of all kinds, and that because of the shortage of money they have had to discriminate between many different kinds of people and property and have been unable to satisfy many people whom they would be pleased to accommodate.
The problem must be viewed in the light of those circumstances, because it is those circumstances which the Bill is designed to some extent to assist. The hon. Lady quite rightly said that discrimination against women might take place at headquarters or at the local office. The beauty of the building societies is not only that they lend money; they also aid people in finding homes and lend on the best possible security.
One of the reasons for the Bill is that, on the whole, pre-1919 property is not as good security as property built later. It has, therefore, been discriminated against. I also ask the hon. Lady to bear in mind that the local manager, invited to lend money to a school teacher aged 55 and within range of retirement age, or to a young man and his wife with a family of two or three young children living in lodgings, is entitled to exercise some discretion and discrimination. If the manager decides in favour of the young family, it is very hard on the elderly school teacher, but life is like that, and it would have been still harder had his discrimination and discretion been exercised on behalf of the elderly teacher.

Dr. Edith Summerskill: The hon. Member's analogy is not quite correct. Would the hon. Member be prepared to lend money to a school teacher of the same age as the young man?

Sir H. Butcher: I think that the answer is possibly yes and possibly no. In


making the loan in one case, one would be lending to a single lady and housing one person. In the other case, one would be lending to the head of a family, and housing perhaps two, three or four persons.

Dr. Summerskill: The hon. Member is now getting into deep water. Would not he agree that probably a school teacher with a settled income and without dependants is a better risk than the young man with a large family?

Sir H. Butcher: That is the point. There is a combined security behind the building society loan. First, there is the creditworthiness of the borrower, and, secondly, the value of the underlying security. There must be some discretion in these matters in the hands of the lender, who is lending the savings of ordinary people.

Mr. Harold Wilson: A moment or two ago the hon. Gentleman said that it was more desirable to lend to a man with two or three children than to a school teacher aged 55. Then when he was pressed by my right hon. Friend the Member for Warrington (Dr. Summer-skill) he said that it was a question of creditworthiness. Is he saying that building societies lend money in terms of social desirability in providing homes for more persons, or is he saying that the criterion is purely one of creditworthiness?

4.0 p.m.

Sir H. Butcher: I am grateful to the right hon. Gentleman for his intervention. I would have thought that he, at least, would have apprehended an argument briefly stated. There are two considerations, both of which are in the mind of the lender, and to both of which he may give some importance—the amount of importance resting within his discretion. The first is the underlying security. If the property concerned is a ramshackle old property, with gas lighting, and no garden, or space for a garage, and overlooking a slaughterhouse, he will not lend to a male or a female. On the other hand, he is concerned with the creditworthiness of the borrower. If a person endeavoured to purchase a property upon which he could not maintain the instalments, however desirable the property the building society still would not lend,

because of the person's lack of ability to repay.

Mr. H. Wilson: The hon. Member has suggested that I did not comprehend a simple argument. I comprehended it perfectly. As he says, it is a question of monetary risk, first, in respect of the property and, secondly, in respect of the people to whom the money is to be lent.
In reply to my right hon. Friend the hon. Member was arguing that it would be right to select a young family man rather than an older teacher, on the ground that that choice would mean that he would be providing housing accommodation for more persons in one house that would be the case if he favoured the school teacher. I understand his latest argument, but was not he, earlier, trying to argue that apart from monetary and security considerations there was a case for discrimination upon social grounds?

Sir H. Butcher: I am not suggesting that there is a case for any kind of discrimination. I merely suggest that if somebody has to go without, the person who is lending the money has to make some choice, and if he happens to make it one way there is no reason for complaint.
I often wonder whether all the cases to which the hon. Lady has referred as being turned down have been turned down on the basis of sex. I cannot think of anything less sex-conscious than a building society. In one case, which probably figures in the hon. Lady's files, and which concerns the society of which I am a director, a single lady, aged 40, who was a school teacher, earning a good salary and entirely creditworthy in every way, made an application in respect of a bungalow which she proposed to purchase, in South-East London. The society refused the loan, and I am sure that she told the hon. Lady that this was a case of shameless discrimination on grounds of sex.
The real reasons were that the lady in question wanted to purchase the leasehold of a house in a predominantly freehold area, which is always an adverse factor in connection with resale; the floor area of the property was only 570 feet super; the local surveyor took the view that the demand on resale would be extremely limited; the property had an unattractive outlook at the back, and finally, the lady in question not having employed surveyors, she was paying £400 too much.
The hon. Lady has mentioned numerous cases where applications made by women have been refused, but many men's applications have been refused for almost the same reasons. I regard it as wrong that any discrimination should be made upon a basis purely of sex, but there are certain fundamentals which must be observed. It is a fact that men and women are not alike; that circumstances occur in a woman's life which do not occur in a man's and, furthermore, that with limited funds there must be some measure of discretion. I believe that the Amendment is unnecessary.

Mr. G. R. Mitchison: Will the hon. Member give us the benefit of his experience, as a director of a building society, as to the practice of asking for male guarantors? Do men have to provide female guarantors?

Sir H. Butcher: I have made inquiries on this point. In certain cases a guarantor is required, but the sex of the guarantor is entirely a matter of discretion. It is the creditworthiness of the guarantor to which one society, at least, directs its attention, except in the case of husband and wife, when the whole basis behind the building society movement is the question of a home. If the husband and wife are upon such terms that upon their entry to the home which it is assumed they will jointly occupy they are not prepared to cross-guarantee each other, then my building society will not wish to be concerned in the business. It is the experience of building societies that broken homes bring the houses concerned into possession.

Dr. Summerskill: The hon. Member has just said that the sex of the guarantor does not enter into the matter. Can he tell us of a case where he has invited a woman who is creditworthy to guarantee another woman?

Sir H. Butcher: The hon. Lady does not understand the procedure. It is not the responsibility of building societies to find guarantors. That is the responsibility of the proposed borrower. It is he or she who submits the guarantor, whom the society will approve or not approve as creditworthy.

Dr. Summerskill: Has a society approved a case where a woman who is creditworthy guarantees another woman?

Sir H. Butcher: I would answer the hon. Lady with the fullest information if I had it available.

Mr. G. Lindgren: The last thing that we want is to have the discussion upon an Amendment such as this developing into a feminist one, and an argument about the relative merits of the sexes. I intervene as a trade unionist. My trade union—the Transport Salaried Staffs Association—caters both for men and women, and since nationalisation we have been able to secure equality for men and women doing equal work.
Many examples have come to our notice where we are quite satisfied that discrimination has been exercised purely upon the basis of sex. I want to follow up the point made by my right hon. Friend the Member for Warrington (Dr. Summerskill), but before doing so I would say straight away that building societies have a perfect right to discriminate upon the basis both of the property concerned and the creditworthiness of the individual. There is a considerable discrimination as between men. A railway clerk is much more likely to get a loan from a building society than is a bricklayer. That is simply because, as a railway clerk, he has guaranteed employment, whereas the bricklayer's employment is quite haphazard, especially under a Tory Government.
But we know of a number of cases where women in fairly responsible and pensionable jobs, and who have a salary which is adequate to bear the burden of repaying the building society, have been asked to find guarantors. I can understand women objecting to having to find male guarantors. Unless he is one of the family it may be difficult for a person acting as a male guarantor to explain why he is doing so in respect of a single woman. In one case that I have in mind a young woman went to the chief in her office and said, "Would you do it for me?" He said, "I would be only too pleased, but what is my wife going to say when she finds out?" That is the difficulty.
As for the point raised by my right hon. Friend the Member for Warrington, a number of the women of whom I have spoken have offered other women as guarantors but have still been refused. The building societies' excuses have been


very much the same as those given by my hon. Friend the Member for Coventry (Miss Burton).
There is a further aspect of the matter which I regard as unfair. Women within the British Transport Commission service retire at 55, and I agree that there is discrimination as between men and women, because men retire at 60, again, I think, not without some reason. When the woman is in the 35 to 40 years of age range, and makes application for a loan, a building society has often queried what her income was to he after she retired. Naturally, she would tell them what her superannuation payments had been, and also the fact that part of the superannuation arrangement provides that there should be a year's salary as a lump sum payment on retirement, in addition to the weekly payments that carry on.
The building societies have, in fact, in the case of women but not of men in the railway service, tried to secure a lien on the lump sum payments as a means of trying to complete the mortgages, by the time they finish their service with the Transport Commission, purely on a basis of discrimination because women were concerned, and not on the basis of creditworthiness. We, as trade unionists, object to that. We agree that it is the building societies' money, and their assessment of the property and the creditworthiness of the individual concerned, and, if they are not satisfied that their money is safe, it is their job to deal with the application accordingly.
What we object to is the case in which, where the building society's money is safe, and where the loan would be given to a man, it is refused, particularly on the basis of a requirement for a male guarantor. We support the Amendment purely on the grounds of justice and fairness between one member of the community and another.
One last word on the attempt to drag in the red herring that building societies are concerned with social service. I am not going to say anything about building societies as such, but to say that they are concerned with social service is just not true. They are in this business for the money they can get out of it. and they are not going to take a risk.

Mr. Nigel Fisher: I do not think that the hon. Gentleman is being quite fair. Where two cases are before

a society—and, as a director of a society, I have often had to deal with this problem—and where the merits are very evenly balanced one way or another, the good society, and, I think, most societies, will come down on the side of the greatest social need, other things being equal.

Mr. Lindgren: I do not know what the association between Tory Members of Parliament and the building societies is, but I have always looked upon building societies as money-lending organisations. If a building society has got into a position in which its "kitty" is so low that it has only enough money to lend on one house, if it has to weigh up on the basis of social values as between two applications of equal merit, except that one man has three children and the other two, I would say to the hon. Member for Surbiton (Mr. Fisher), who intervened very courteously and who makes statements in the House which he believes to be true, that I do not think that that happens, but that it operates much more on the basis of money.
The point I was wanting to make is that, in my experience in dealing with this matter, concerning the houses which women members of my trade union have been trying to buy, they have not been houses of the three-bedroom, parlour type, which normally the young married man buys, but, on the contrary, small maisonettes at Wembley, or Harrow, or other London suburbs, or even perhaps outside. They are houses built by private enterprise which, in fact, very often, are not suitable for married persons unless those married persons are without children.
Therefore, purely on that basis, I support the Amendment, and I hope that my right hon. and hon. Friends will do so in the Division Lobby if the Minister cannot give us a satisfactory reply.

4.15 p.m.

Mr. H. Brooke: In this context, if there is anything less sex-conscious than a building society, it is myself.
I and all my right hon. and hon. Friends in the Government are determined that this imaginative scheme of ours shall operate equally for the benefit of men and women. We stand by everything that was published in the White Paper. The building societies will have regard, as is stated in the White Paper,


to the creditworthiness of the borrower, as well as to the suitability of the security which the house offers. No one could carry on and operate a scheme of that kind if that were not the case.
The point at issue, to which considerable attention has been drawn, is whether, in fact, the building societies do put a particular interpretation of their own on the word "creditworthiness" and assume that a woman is, intrinsically, less creditworthy to the extent that she needs a male guarantor, or to the extent that some other special conditions have to be fulfilled.
All of us will recognise that people do vary in their ability to meet the obligations which they will incur if they receive an advance for house purchase. Men will differ according to age and income, and women also according to age and income; while women may also differ according to the marital state—or not: I do not know. What we want to secure, and I am sure that the whole Committee is at one in this, is that there shall not be a private gloss upon that phrase "creditworthiness" so as to make it operate against women.
The hon. Lady the Member for Coventry, South (Miss Burton) drew attention to a paragraph in The Times published in November, and the Secretary of the Building Societies Association has subsequently stated that that paragraph did not correctly represent the policy of the Association. Though I know that the hon. Lady is familiar with it, I hope she will forgive me if I read it to the Committee, because I think that it should be on record. This is the statement made by the Building Societies Association on 4th December:
Whether to make an advance and, if so, how much to lend, to any particular applicant on the security of any property is essentially a matter for the directors of each building society to determine. The Association could not, even if it so wished, fetter the discretion of directors in such a matter.
Subject to this, the Association believes that the policy of most of its members is to treat a woman applicant for a loan in exactly the same way as a man if she is in regular employment and earning a sufficient income. In such cases there is no discrimination on grounds of sex and no male guarantor is normally required.
Where a house is nominally being bought by a married woman but on the strength of her

husband's income and position, a different situation is presented and in such cases the guarantee of the husband is usually required.
It must be remembered that, at the present time, most building societies have far more applications for loans than they can meet and therefore some women may be unable to obtain a loan immediately, but this applies equally to male applicants.
Following that, we had a debate on the Second Reading of the Bill now before the Committee and the hon. Lady called the attention of the House to 11 or 12 cases, extending over a period of years in different parts of the country, in which she had evidence that women applicants appeared, at least, to have been discriminated against on grounds of sex alone. She said very frankly in her speech today that it was not definitely clear that it was because of policy laid down by the directors of the society at headquarters; it may have been a local representative of the society applying a rule of his own.
I want to say that, because the hon. Lady has been very frank with the House and with me about this, and she has told the Committee today that, following that debate, in which I undertook to look into any further information which she gave me, we had a talk. She gave me certain information. She asked me not to reveal the identity of individuals. I have observed that, but it did enable me to ascertain in most—not all—of the cases, as she will agree, which society it was which was concerned. As I promised her I would do, I followed that up.
I should at this point like to read to the Committee a Written Answer I gave in the House to one of my hon. Friends on 22nd January, referring to this matter. I said:
I have had further discussions with the Building Societies Association, and they have confirmed the statement made on 4th December that the policy of most of their members is to treat a woman applicant for a loan in exactly the same way as a man if she is in regular employment and earning a sufficient income. The Council of the Association have sent a copy of this statement to all their members commending it to them. The Council also wrote to 11 societies which might have been concerned with the cases quoted by the hon. Member for Coventry, South (Miss Burton) on 15th December. All are members of the Association, and all have given an unqualified assurance that the Association's statement represents their own policy and has their complete support. The Association have further promised that they will investigate any cases of alleged discrimination against women


applicants provided that the necessary details are supplied."—[OFFICIAL REPORT, 22nd January, 1959, Vol. 598, c. 55.]
That, I think, makes perfectly clear the attitude of the Association and the action which it has taken.
I think that the hon. Lady will grant me that some of those cases—not all, but some—are from the past, and that it is quite possible that there may have been a change of policy between the date of the letter which she received from some lady or another and present. It was particularly interesting, I thought, that the inquiries made into the headquarters policy of 11 societies, whose names the hon. Lady furnished to me, showed that the official policy of all those societies is that there shall be no sex discrimination and that they accept the Association's view.
What we want to do—and I am sure we are all at one in this—is to secure that this scheme is operated in a way which avoids sex discrimination, and I think that the Association has certainly given powerful assurances on this matter.
The hon. Member for Wellingborough (Mr. Lindgren) said that if I did not accept this Amendment on behalf of the Government he thought that the Opposition should vote against us. I hope that no such action will be taken, because I cannot really believe that the Amendment, as it stands, is a sensible one. It would import into the qualifications for trustee status a question about the practice and behaviour of the building society in question which really has no relevance whatever to its position of financial soundness, on which it should be decided whether that society obtains trustee status or not. I cannot think that that is the hon. Lady's intention. I do not know whether she noticed, when she tabled the Amendment, that it would have that, I think, quite indefensible, result.
If I sense the opinion of the Committee correctly, I believe I am right in saying that it is the desire of both sides that this scheme to which the Bill leads up shall be operated fully in the manner outlined in the statement by the Building Societies Association which I have read to the Committee; that is to say, that though each society must retain its discretion in determining the creditworthiness of any individual regardless

of sex there should be no bias against a woman on any ground whatever provided that it is recognised all the time that it is the creditworthiness of the individual, whether man or women, which is to be judged.
What I suggest should happen, if the hon. Lady will be good enough not to press this Amendment, is that I should have further talks with the building society movement in the light of this debate. I do not think I need draw the building societies' attention to the debate, because I think that it will be read by them with care. But I will certainly give an undertaking to that effect—to have these talks with the building society movement, and to see what is the best way of devising that the desire of the Committee shall be met and the policy outlined in the Building Societies Association letter applied, so that we can all feel confident that no discrimination on grounds of sex will be exercised; though there must be discrimination, and there should be, on grounds of the creditworthiness of the individual applicant regardless of sex, and, of course, on the ground of the suitability of the security which the house offers.

Mr. W. R. Williams: If the right hon. Gentleman fails to come to an agreement with the Association on a suitable formula, will he still find ways and means, before we reach the next stage of the Bill, to put into effect the basic principle contained in this Amendment?

Mr. Brooke: That will be my aim. I am sure the hon. Member realises that even when the Bill has gone through Parliament there will need to be agreement with each building society which desires to come into the scheme.

Mr. Mitchison: I listened to the debate in December, and I have listened to the debate today. What we are considering now is whether a particular responsibility should be put on the Minister in this matter.
The position seems to me to be this. We have, in the first place, a reputable newspaper; in the second place, at least three Members of the Committee speaking of cases in which there has been credit discrimination on account of sex, and it seems to me that the demand for a male


guarantor necessarily implies something of the sort; and we have had, against that, two hon. Members, both directors of building societies, speaking from their experience; and the right hon. Gentleman giving us the results of the inquiries which he made of the Building Societies Association.
On that matter, I take three points. The first one is that there are societies, including at least one very large and reputable society, against which I say nothing whatever in this matter, which are not members of the Building Societies Association. There are many others, and the answer given by the Building Societies Association may or may not bind its members. It certainly does not bind anyone else.
4.30 p.m.
It is not like the case of the local authority associations, to which the right hon. Gentleman is no doubt accustomed. This Association is only a partial representative of the building society movement. I turn to what the Building Societies Association did, in fact, reply. It said the first time, and confirmed the second time, that most of its members adhered to the practice of not discriminating by reason of sex. If we are to accept that as sufficient, when an Association not fully representative of the movement can speak only in relation to most of its members, I am led to the conclusion that there is something in the charge of sex discrimination.
It was very easy for the Building Societies Association, if it was in a position to do so, to say that none of its members did anything of the sort, but on neither occasion, when it had the opportunity, did it say so. To put it at its very lowest, in my mind and, I am certain, in the minds of many hon. Members and of those who will read about this debate, there is some considerable doubt whether societies do not discriminate on account of sex.
I would put it further and say that my conclusion at the end of the debate is that there certainly had been such a practice. I notice that the Minister himself referred to a probable change of policy. That is to say, when there was trouble in the House of Commons about it there was a change of policy on the part of building societies, and their answers relating to present and future were phrased accordingly.
But if, as a result of debates in the House of Commons, they had changed their policy and improved it in this respect, what is the guarantee that, when they have their trustee status and their Government money in certain cases, they will not slip back into the former error of their ways? That is the real point. Once we come to the possibility of the present existence of discrimination, and the far more definite possibility that there was a good deal more of it before there was a row about it, have we to do anything about it?
The right hon. Gentleman's answer is, "No, you need not do anything about it. If the society is solvent you are not concerned with its moral behaviour." I do not think that we ought to accept that, and I doubt whether the Committee would be willing to accept it. I doubt whether the right hon. Gentleman, if he had been confident of his facts, would have put forward that remarkable argument.
We are being asked, in effect, to direct public money into the hands of a certain number of building societies. In connection with that, quite rightly, we wish to secure ourselves of their solvency, but, if there are cases of sex discrimination, are we free from responsibility and are we to say, "It does not matter a bit. Provided that they are rich enough they can do what they like"? That is what the right hon. Gentleman's argument amounts to.
Suppose that we have a building society which, in some form or another, was subsidising an obviously immoral practice. Nobody in the Committee would wish it to be supported with public money, and the mere fact that by so doing it had attained a high degree of solvency would not justify its support. This is not a highly immoral practice in that sense, but discrimination between men and women in matters of buying a house is certainly anti-social; and it is the responsibility of the Committee to see that where there is, at any rate, doubt whether the practice exists we take some security to stop it in the case of societies which will receive public money. It will be a lamentable shirking of our responsibility if we fail to do something about this.
That is the present position, but the Minister says, "Leave it to me. I am going to talk to them again." These conversations have taken place before, and will no doubt happen again. I am


quite certain that the right hon. Gentleman gave us an honest account of them, but it is not a satisfactory state of affairs when the right hon. Gentleman has known all about the difficulty since December and he can say no more now than, "I have seen the necessity of talking to them again and I shall do so."
We do not want the people responsible under the Bill for questions of financial solvency to have anything to do with it. It is not a matter for the Chief Registrar, or for the Treasury. This is the responsibility of the right hon. Gentleman himself, as Minister of Housing and Local Government. This is a matter in connection with the provision of houses and, for that reason, it is he who is dealing with the Bill and not the Treasury.
We say that it is the right hon. Gentleman's responsibility, when he is giving this public money under conditions to certain building societies, to see about their conduct in this matter. If he is satisfied that there is nothing in it and there is no sex discrimination, he will fulfil the condition which we seek to insert in the Bill and no more will be said. But he will be answerable for the discharge of that duty to the House of Commons.
On the other hand, if the right hon. Gentleman is not satisfied—and I can understand his desire to talk to the societies again about it—surely he should be the first to welcome the obligation which the Amendment would lay upon him and the opportunity which it would give him to ensure that building societies were doing what we all recognise to be the right thing. I say without hesitation, at the end of the debate, that I am quite definitely of the opinion that there is some discrimination on the ground of sex and that there has been more in the past.
I have re-read the speeches made in the December debate and I have considered what the right hon. Gentleman has said. If somebody asked me, "Yea or nay, do you think there is discriminantion?" my reply would be, "I think that there is and certainly there has been in the past, and unless something of this sort is put in the Bill there is no guarantee that the discrimination which exists, and no doubt has been damped down in view of these debates, would not recur."
I cannot understand why the Minister declines responsibility in the matter. If the Government are satisfied, well and good. All that they then submit to is Questions from hon. Members in the House. If they are not satisfied, they certainly should accept this responsibility. I earnestly hope that they will reconsider the matter. If the right hon. Gentleman is prepared to say that he does not like the form of words, but will introduce an Amendment at a later stage to this effect, I am sure that my hon. Friend the Member for Coventry, South (Miss Burton) will accept that from him. Otherwise, we must regard the right hon. Gentleman's speech as a very unsatisfactory denial in so far as it was a denial, of what appears to be the practice, and a refusal of responsibility in a social issue which we on this side of the Committee cannot accept.

Miss Burton: I am glad that my right hon. and hon. Friends on the Opposition Front Bench have taken the line that they have, because I was not satisfied with the Minister's reply. I honestly believe that the Minister is anxious that there shall be no discrimination. I thought so when I saw him privately and I think so now. I will not go back over all this, but the statement quoted by the Minister on 4th December arose only because we made such a fuss in the House that something had to be done.
It is blatantly obvious that there is sex discrimination on the question of the male guarantor, because if a male guarantor was not asked for a lot of these complaints would disappear. Everyone I have received has been on this question and I have also had put to me the point raised by my right hon. Friend the Member for Warrington (Dr. Summerskill), that never in any organisation which has been in touch with me has there arisen the point that a woman has been accepted as a guarantor. Whatever she earned, she was unacceptable.
I hope very much that the Minister, in his further discussions, will be able to prevail upon the building societies to insist upon some wording such as the Amendment contains, but I have no wish to withdraw the Amendment. I hope we shall go to a Division, because I think there is discrimination.

Mr. H. Brooke: Let us be quite clear about what is happening. The Opposition are now proposing to vote for an


Amendment which would make the availability of trustee status to a building society dependent on certain practices which it followed or did not follow in making advances; practices which I think, in the eyes of all sensible people are irrelevant to the question whether it is a suitable depository for trust funds. I have made the position of the Government clear. This is not a Socialist State, where the Government can give orders to everybody—[HON. MEMBERS: "This is public money."] That is exactly what I was referring to in my speech. Building societies are independent bodies which have contributed greatly to the better housing of the people. The Bill is based

on the concept of agreements between the Government and individual building societies.

I have assured the Committee that in the light of this debate I shall have further discussion with the Building Societies Association to secure that this imaginative scheme is operated in a manner which avoids sex discrimination. Having been given that assurance, the Opposition now wish to carry to a vote the application of this discrimination in the quite irrelevant case of trustee status.

Question put, That those words be there inserted:—

The Committee divided: Ayes 211, Noes 237.

Division No. 29.]
AYES
[4.44 p.m.


Ainsley, J. W.
Evans, Edward (Lowestoft)
McGhee, H. G.


Albu, A. H.
Fernyhough, E.
McInnes, J.


Allaun, Frank (Salford, C.)
Finch, H. J.
McKay, John (Wallsend)


Allen, Arthur (Bosworth)
Fitch, Alan
McLeavy, Frank


Allen, Scholefield (Crewe)
Fletcher, Eric
MacMillan, M. K. (Western Isles)


Awbery, S. S.
Foot, D. M.
MacPherson, Malcolm (Stirling)


Bacon, Miss Alice
Forman, J. C.
Mahon, Simon


Balfour, A,
Fraser, Thomas (Hamilton)
Mainwaring, W. H.


Bellenger Rt. Hon. F. J.
Gaitskell, Rt. Hon. H. T. N.
Mallalieu, E. L. (Brigg)


Bence, C. R. (Dunbartonshire, E.)
George, Lady Megan Lloyd(Car'then)
Mann, Mrs. Jean


Beswick, Frank
Gibson, C. w.
Marquand, Rt. Hon. H. A.


Blackburn, F
Greenwood, Anthony
Mason, Roy


Blenkinsop, A.
Grenfell, Rt. Hon. D. R.
Mikardo, Ian


Blyton, W. R.
Grey, C. F.
Mitchison, G. R.


Boardman, H.
Griffiths, David (Rother Valley)
Monslow, W.



Griffiths, Rt. Hon. James (Llanelly)
Moody, A. S.


Bonham Carter, Mark
Griffiths, William (Exchange)
Morris, Percy (Swansea, W.)


Bottomley, Rt. Hon. A. G.
Grimond, J.
Morrison, Rt. Hn. Herbert (Lewis'm, S.)


Bownen, E. R. (Cardigan)
Hale, Leslie
Mort, D. L.


Bowen, E. R. (Cardigan)
Hamilton, W. W.
Moss, R.


Bowles, F. C.
Hannan, W.
Moyle, A.


Boyd, T. C.
Hastings, S.
Mulley, F. W.


Braddock, Mrs. Elizabeth
Hayman, F. H.
Noel-Baker, Francis (Swindon)


Brookway, A. F.
Henderson, Rt. Hn. A. (Rwly Regis)
Noel-Baker, Rt. Hon. P. (Derby, S.)


Broughton, Dr. A. D. D.
Herbison, Miss M.
Oliver, G. H.


Brown, Rt. Hon. George (Belper)
Hobson, C. R. (Keighley)
Oram, A. E.


Brown, Thomas (Ince)
Holman, P.
Oswald, T.


Burke, W. A.
Holmes, Horace
Owen, W. J.


Burton, Miss F. E.
Houghton, Douglas
Paget, R. T.


Butler, Herbert (Hackney, C.)
Hughes, Cledwyn (Anglesey)
Paling, Rt. Hon. W. (Dearne Valley)


Butler, Mrs. Joyce (Wood Green)
Hughes, Emrys (S. Ayrshire)
Paling, Will T. (Dewsbury)


Castle, Mrs. B. A.
Hughes, Hector (Aberdeen, N.)
Palmer, A. M. F.


Champion, A. J.
Hunter, A. E.
Pannell, Charles (Leeds, W.)


Chapman, W. D.
Hynd, J. B. (Attercliffe)
Pargiter, G. A.


Chetwynd, G. R.
Irvine, A. J. (Edge Hill)
Parker, J.


Cliffe, Michael
Irving, Sydney (Dartford)
Parkin, B. T.


Clunie, J.
Janner, B.
Pearson, A.


Coldrick, W.
Jeger, George (Goole)
Peart, T. F.


Collick, P. H. (Birkenhead)
Jeger, Mrs. Lena(Holbn &amp; St. Pncs. S.)
Pentland, N.


Corbet, Mrs. Freda
Johnson, James (Rugby)
Plummer, Sir Leslie


Craddock, George (Bradford, S.)
Jones, Rt. Hon. A. Creech (Wakefield)
Popplewell, E.


Cronin, J. D.
Jones, Jack (Rotherham)
Prentice, R. E.


Crossman, R. H. S.
Jones, J. Idwal (Wrexham)
Price, J. T. (Westhoughton)


Davies, Rt. Hon. Clement (Montgomery)
Key, Rt. Hon. C. W.
Price, Philips (Gloucestershire, W.)


Davies, Ernest (Enfield, E.)
King, Dr. H. M.
Probert, A. R.


Davies, Harold (Leek)
Lawson, G. M.
Proctor, W. T.


Deer, G.
Ledger, R. J.
Randall, H. E.


Dodds, N. N.
Lee, Frederick (Newton)
Rankin, John


Donnelly, D. L.
Lee, Miss Jennie (Cannock)
Reeves, J.


Dugdale, Rt. Hn. John (W. Brmwch)
Lewis, Arthur
Reid, William


Ede, Rt. Hon. J. C.
Lindgren, G. S.
Reynolds, G, W.


Edelman, M.
Logan, D. G.
Rhodes, H.


Edwards, Rt. Hon. John (Brighouse)
Mabon, Dr. J. Dickson
Robens, Rt. Hon. A.


Edwards, Rt. Hon. Ness (Caerphilly)
McAlister, Mrs. Mary
Roberts, Albert (Normanton)


Edwards, Robert (Bilston)
McCann, J.
Roberts, Goronwy (Caernarvon)


Edwards, W. J. (Stepney)
MacColl, J. E.
Ross, William


Evans, Albert (Islington, S.W.)
MacDermot, Niall
Royle, C.




Shinwell, Rt. Hon. E.
Stones, W. (Consett)
Wells, Percy (Faversham)


Short, E. W.
Stross, Dr. Barnett (Stoke-on-Trent, C.)
Wells, William (Walsall, N.)


Silverman, Julius (Aston)
Summerskill, Rt. Hon. E.
Wilkins, W. A.


Simmons, C. J. (Brierley Hill)
Sylvester, G. 0.
Willey, Frederick


Skeffington, A. M.
Taylor, Bernard (Mansfield)
Williams, David (Neath)


Slater, Mrs.. H. (Stoke, N.)
Thomas, George (Cardiff)
Williams, Rt. Hon. T. (Don Valley)


Slater, J. (Sedgefield)
Thomson, George (Dundee, E.)
Williams, Richard (Openshaw)


Smith, Ellis (Stoke, S.)
Thornton, E.
Wilson, Rt. Hon. Harold (Huyton)


Sorensen, R. W.
Timmons, J.
Winterbottom, Richard


Soskice, Rt. Hon. Sir Frank
Tomney, F.
Woodburn, Rt. Hon. A.


Sparks, J. A.
Usborne, H. C.
Woof, R. E.


Spriggs, Leslie
Viant, S. P.
Yates, V. (Ladywood)


Steele, T.
Warbey, W. N.



Stewart, Michael (Fulham)
Watkins, T. E.
TELLERS FOR THE AYES:


Storehouse, John
Weitzman, D.
Mr. John Taylor and Mr. Rogers




NOES


Agnew, Sir Peter
Erroll, F. J.
Lindsay, Hon. James (Devon, N.)


Aitken, W. T.
Farey-Jones, F. W.
Lindsay, Martin (Sollhull)


Allan, R. A. (Paddington, S.)
Fell, A.
Linstead, Sir H. N.


Alport, C. J. M.
Finlay, Graeme
Lloyd, Maj. Sir Guy (Renfrew, E.)


Anstruther-Gray, Major Sir William
Fisher, Nigel
Longden, Gilbert


Arbuthnot, John
Fort, R.
Loveys, Walter H.


Armstrong, C. W.
Freeth, Denzil
Lucas, Sir Jocelyn (Portsmouth, S.)


Ashton, H.
Gammans, Lady
Lucas-Tooth, Sir Hugh


Atkins, H. E.
Garner-Evans, E. H.
Macdonald, Sir Peter


Baldwin, Sir Archer
George, J. C. (Pollok)
Mackeson, Brig. Sir Harry


Balniel, Lord
Gibson-Watt, D.
Maclean, Sir Fitzroy (Lancaster)


Barber, Anthony
Glover, D.
McLean, Neil (Inverness)


Barlow, Sir John
Glyn, Col. Richard H.
Macleod, Rt. Hn. Iain (Enfield, W.)


Barter, John
Godber, J. B.
Macmillan, Rt. Hn. Harold (Bromley)


Batsford, Brian
Goodhart, Philip
Macmillan, Maurice (Halifax)



Gough, C. F. H.
Macpherson, Niall (Dumfries)


Baxter, Sir Beverley
Gower, H. R.
Maddan, Martin


Bell, Philip (Bolton, E.)
Graham, Sir Fergus
Maitland, Cdr. J. F. W. (Horncastle)


Bennett, F. M. (Torquay)
Green, A.
Maitland, Hon. Patrick (Lanark)


Bennett, Dr. Reginald
Gresham Cooke, R.
Manningham-Buller, Rt. Hn. Sir R.


Bevins, J. R. (Toxteth)
Grosvenor, Lt.-Col. R. G.
Markham, Major Sir Frank


Bidgood, J. C.
Gurden, Harold
Marlowe, A. A. H.


Biggs-Davison, J. A.
Hall, John (Wycombe)
Marshall, Douglas


Bingham, R. M.
Harris, Frederic (Croydon, N.W.)
Mathew, R.


Birch, Rt. Hon. Nigel
Harris, Reader (Heston)
Mawby, R. L.


Bishop, F. P.
Harvey, Sir Arthur Vere (Macclesf'd)
Maydon, Lt.-Comdr. S. L. C.


Black, Sir Cyril
Hay, John
Milligan, Rt. Hon. w. R.


Body, R. F.
Heald, Rt. Hon. Sir Lionel
Mott-Radclyffe, Sir Charles


Boyd-Carpenter, Rt. Hon. J. A.
Hicks-Beach, Maj. W. W.
Nairn, D. L. S.


Boyle, Sir Edward
Hill, Rt. Hon. Charles (Luton)
Neave, Airey


Bromley-Davenport, Lt.-Col. W. H.
Hill, Mrs. E. (Wythenshawe)
Nicholls, Harmar


Brooke, Rt. Hon. Henry
Hill, John (S. Norfolk)
Nicholson, Sir Godfrey (Farnham)


Browne, J. Nixon (Craigton)
Hinchingbrooke, Viscount
Noble, Michael (Argyll)


Bullus, Wing Commander E. E.
Hobson, John (Warwick &amp; Leam'gt'n)
Nugent, G. R. H.


Burden, F. F. A.
Holland-Martin, C. J.
Oakshott, H. D.


Butcher, Sir Herbert
Hope, Lord John
O'Neill, Hn. Phelim (Co. Antrim, N.)


Butler, Rt. Hn. R.A. (Saffron Walden)
Hornsby-Smith, Miss M. P.
Orr-Ewing, C. Ian (Hendon, N.)


Campbell, Sir David
Horsbrugh, Rt. Hon. Dame Florence
Page, R, G.


Carr, Robert
Howard, Gerald (Cambridgeshire)
Panned, N. A. (Kirkdale)


Cary, Sir Robert
Howard, Hon. Greville (St. Ives)
Partridge, E.


Channon, P.
Howard, John (Test)
Peel, W. J.


Chichester-Clark, R.
Hughes Hallett, Vice-Admiral J.
Peyton, J. W. W.


Cole, Norman
Hughes-Young, M. H. C.
Pickthorn, Sir Kenneth


Cooke, Robert
Hulbert, Sir Norman
Pilkington, Capt. R. A.


Cooper-Key, E. M.
Hurd, Sir Anthony
Pitman, I. J.


Cordeaux, Lt.-Col. J. K.
Hutchison, Michael Clark (E'b'gh, S.)
Pitt, Miss E. M.


Corfield, F. V.
Hutchison, Sir Ian Clark(E'b'gh, W.)
Powell, J. Enoch


Craddock, Beresford (Spelthorne)
Hutchison, Sir James (Scotstoun)
Price, David (Eastleigh)


Crosthwaite-Eyre, Col. O. E.
Hylton-Foster, Rt. Hon. Sir Harry
Ramsden, J. E.


Crowder, Sir John (Finchley)
Iremonger, T. L.
Rawlinson, Peter


Cunningham, Knox
Irvine, Bryant Godman (Rye)
Redmayne, M.


Dance, J. C. G.
Jenkins, Robert (Dulwich)
Remnant, Hon. P.


Davidson, Viscountess
Jennings, J. C. (Burton)



D'Avigdor-Goldsmid, Sir Henry
Jennings, Sir Roland (Hallam)
Ridsdale, J. E.


de Ferranti, Basil
Johnson, Dr. Donald (Carlisle)
Robertson, Sir David


Digby, Simon Wingfield
Johnson, Eric (Blackley)
Robinson, Sir Roland (Blackpool, S.)


Dodds-Parker, A. D.
Jones, Rt. Hon. Aubrey (Hall Green)
Roper, Sir Harold


Donaldson, Cmdr. C. E. McA.
Keegan, D.
Ropner, Col. Sir Leonard


Doughty, C. J. A.
Kerr, Sir Hamilton
Russell, R. S.


du Cann, E. D. L.
Kershaw, J. A.
Scott-Miller, Cmdr. R.


Duncan, Sir James
Kirk, P. M.
Sharples, R. C.


Duthie, W. S.
Lambton, Viscount
Smithers, Peter (Winchester)


Eccles, Rt. Hon. Sir David
Lancaster, Col. C. G.
Smyth, Brig. Sir John (Norwood)


Eden, J. B. (Bournemouth, West)
Leavey, J. A.
Spearman, Sir Alexander


Elliott, R.W (Nc'castle upon Tyne, N.)
Leburn, W. G.
Speir, R. M.


Emmet, Hon. Mrs. Evelyn
Legge-Bourke, Maj. E. A. H.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Errington, Sir Eric
Legh, Hon. Peter (Petersfield)
Stanley, Capt. Hon. Richard







Stevens, Geoffrey
Thompson, R. (Croydon, S.)
Ward, Dame Irene (Tynemouth)


Steward, Sir William (Woolwich, W.)
Thornton-Kemsley, Sir Colin
Webbe, Sir H.


Stoddart-Scott, Col. Sir Malcolm
Tiley, A. (Bradford, W.)
Webster, David


Storey, S.
Tilney, John (Wavertree)
Whitelaw, W. S. I.


Stuart, Rt. Hon. James (Moray)
Turton, Rt. Hon. R. H.
Williams, Paul (Sunderland, S.)


Studholme, Sir Henry
Tweedsmuir, Lady
Williams, R. Dudley (Exeter)


Summers, Sir Spencer
Vane, W. M. F.
Wills, Sir Gerald (Bridgwater)


Sumner, W. D. M. (Orpington)
Vaughan-Morgan, J. K.
Wilson, Geoffrey (Truro)


Taylor, William (Bradford, N.)
Victors, Miss Joan
Wolrige-Gordon, Patrick


Teeling, W.
Wakefield, Edward (Derbyshire, W.)
Woollam, John Victor


Temple, John M.
Wakefield, Sir Wavell (St. M'lebone)



Thomas, Leslie (Canterbury)
Walker-Smith, Rt. Hon. Derek
TELLERS FOR THE NOES:


Thomas, P. J. M. (Conway)
Wall, Patrick
Colonel J. H. Harrison and


Thompson, Kenneth (Walton)
Ward, Rt. Hon. G. R. (Worcester)
Mr. Bryan.

Mr. H. Wilson: I beg to move, in page 1, line 9, after "society", to insert:
complies with the provisions of the Schedule (Conditions of approval: pool fund) to this Act and".
I do not think that I need detain the Committee very long in moving this Amendment. The Minister may say that it is in the wrong place, or that it is in the wrong form; and, of course, if the right hon. Gentleman will say that he agrees with it in principle, and will find some other means of dealing with the matter, that might be a fair point which we would wish to consider.
As is known, there are many building societies, and, as the right hon. Gentleman has said, they have performed a valuable function in aiding house development and building over the years. They are also valuable and important channels for saving. There are some very big societies, many of medium size and one or two extremely small ones. What I have to say does not necessarily relate to any particular size of society.
It is within the recollection of the Committee that within the last few years, and from time to time, individual societies have found themselves in financial difficulties which, of course, means that serious problems arise, particularly for the investors in those societies. I think the Minister will agree that I am addressing myself here to a question which is very relevant to the problem of trustee estate. If investors find that a society, for one reason or another, is in trouble, then, as we know, great anxiety is caused. It is not impossible—indeed, it has happened within not very distant memory—that the savings of families may be wiped out by the collapse of a building society. There have been one or two cases in recent years—I will not refer to the most spectacular case which occurred within the last few weeks, because that might be sub judice. But

there have been other cases, not so spectacular and not subject to any kind of legal or criminal proceedings, where, for one reason or another—it may be mismanagement, or it may be termed just bad luck—the society in question ran into financial difficulties. Then one of the larger societies has taken over the society in difficulty and has guaranteed the servicing of the investments which have been made and the loans made to that society.
I submit to the Committee that it is a rather invidious problem, and a tough job, for a big society to take over a smaller one and to deal with its problems. Unfortunately, as I understand—the Minister will correct me if I am wrong—the building societies have no powers in their articles of association or under the building society regulations, or the regulations operated by the Registrar, to get together with any kind of guarantee fund and step in to assist a society which may be in difficulties.
With other things and in other organisations such funds do exist. An outstanding example is that of the Lloyds underwriters. If, for reasons of mismanagement or defalcation or for any other reason, there is a danger that obligations may not be met, Lloyds as a whole, or the guarantee fund operated by Lloyds, can be brought into the rescue, so that the good name of Lloyds is always preserved. That would be a valuable provision in the case of the building society movement.
I am sure that the Committee would agree that it is undesirable that a building society should get into difficulty in the ways in which I have mentioned, and there may be one or two methods by which this could be avoided. Two or three building societies might want to get together to help to carry another society through a difficult period. Or it may be that a loan would be given from a central fund—perhaps on condition that there


was some internal reorganisation, or perhaps not.
As I understand, all that can be done at present is that a bigger society can absorb the smaller society lock, stock and barrel, with all that that means. Very often it means the absorption of useful outlets in terms of new branches in areas where the absorbing society may not be well established; but, at the same time, it may also mean that the absorbing society may have to take over some useless assets which it would not otherwise seek to acquire. The loyalty of individual societies to the movement as a whole has been such that very often in case of need a building society will step in, but that places an unfair strain on the loyalty of that society.
I take it that I am in order in referring to the proposed Schedule to the Act which is referred to in the Amendment. We suggest in that Schedule that regulations be made to enable the establishment of a pool, or guarantee fund, or whatever title may be required, and that any of the societies benefiting under the provisions of this Act should be required to make payments into that pool; that the management of the pool be laid down in a certain manner, with the members of a board to be appointed by the Minister, and so on, and the Minister to have power to make directions requiring returns, audited accounts and all the rest of it. Then, as I say, if any building society gets into difficulty there is a guarantee fund which could step in.
5.0 p.m.
If the Minister says that this is not the way to do it, but that there might be a case for allowing building societies to club together to make loans, that might be a fair argument. But I think that the difficulty which we are facing in relation to this Amendment—we have already faced it in relation to the Amendment disposed of a few minutes ago, and I think that we shall find it as we go through the Committee stage of the Bill—is that the Government have come along with this Measure to provide certain financial assistance to the building societies for doing a job which the Government set out for them without having a proper investigation of the whole of the other aspects of building society law and practice, some aspects of which are now very much out of date.
We have another Amendment on the Notice Paper—I should be out of order in pursuing it in detail now—relating to foreign business. There, again, we have a case where, perhaps, present law and practice are very much too restrictive compared with the needs of the modern situation. I should have liked the Minister to have said that he was going to have a complete inquiry into all these legal aspects and questions of practice, but, of course, I cannot go into them all on this Amendment.
I hope, therefore, that the Minister will tell us that he accepts that there is a problem in respect of building societies that get into difficulties and that either by accepting this Amendment or in some other way he is prepared to alter existing law and practice so that the building society movement as a whole can come to the rescue of societies in difficulties without having to take the rather awkward and complicated procedure by which one building society steps in.

The Economic Secretary to the Treasury (Mr. F. J. Erroll): I am replying to the speech made by the right hon. Member for Huyton (Mr. H. Wilson), because questions relating to the status of building societies fall to the Treasury Ministers Ito answer, as the Chief Registrar, as outlined in the opening lines of the Bill, has a special responsibility for supervising building societies.
Perhaps I might just remind the Committee that the objects of Clause 1 are to approve building societies for investment by trustees and for Government loans. I want to touch particularly on the point about investment by trustees. The Clause will require, if passed, that four conditions should be met which are detailed in Appendix 2 of the White Paper. The object of the Amendment under discussion, as I see it, is that a new and additional condition should be insisted upon, which is outlined in the proposed new Schedule.
I suggest to the Committee that the four conditions are surely already enough without introducing a further condition, but I recognise the merits of the proposal. Intrinsically, the idea for a pool fund can have strong arguments adduced in its favour, but I submit that it would be inappropriate to make contributions to or membership of a pool fund one of the conditions for trustee status. Furthermore,


the scheme outlined in the proposed new Schedule would mean that approved societies would be compelled to contribute to the pool, but the pool would have to come to the assistance of all societies, whether approved or not. It would, therefore, represent a burden on the approved societies, by having to help out non-approved societies as well as any approved society which might be in temporary difficulty.

Mr. Mitchison: If the hon. Gentleman will look at the proposed new Schedule again, I do not think that he will find that that is quite so. It is really paragraph 3 of the Schedule, which says:
The purpose of the pool fund shall be to provide financial assistance to any building society … in such cases, in such form and amount and subject to such conditions as the Board in each case may decide, subject to such regulations or directions (if any) as the Minister may think fit to make or give under this paragraph.
The Minister could, therefore, select any group of building societies as suitable or unsuitable for that assistance.

Mr. Erroll: I am grateful to the hon. and learned Gentleman for that explanation, because I had read the paragraph as meaning any building society. I should have thought that an exclusion so great as to include only approved societies would have been big enough to warrant a mention in the Schedule as drafted. However, I appreciate the explanation which has been given.
As I say, in the course of arguments and discussions about the merits and disadvantages of a pool or guarantee fund the building society movement is, I think, generally against the idea, but in the arguments which I am now going to introduce I am not influenced by that but by certain general conditions which I hope will meet with the agreement of the Committee.
First, as I have said, it represents the introduction of a new condition for trustee status, and since the building society movement as a whole is against the establishment of a pool fund it would mean that we would have to carry this additional condition against the wishes of the movement, on whose co-operation we are naturally and inevitably relying for the successful implementation of the Bill after it has been passed.
Secondly, there are sound arguments against the establishment of such a fund as it might well reduce incentive to prudent and careful management on the part of some building societies, because, in the last resort, they would know that there would always be the pool fund to fall back on. It might, in some extreme cases, lead to a certain amount of inefficiency or, indeed, to excessive risk-taking.

Mr. H. Wilson: If those arguments are valid, will the hon. Gentleman say why they do not apply to Lloyds?

Mr. Erroll: I should have thought that the comparison between the building society movement and Lloyds was a very unwise one to pursue, because in the case of Lloyds, the underwriters and their friends are involved to the last penny of their personal capital, whereas the whole point of the building society movement is to protect the investors, whether they make deposits or subscribe to societies, from any loss greater than the amount of their investment. To be a subscriber to Lloyds involves an altogether different degree of risk. Therefore, a pool fund, if agreed upon by members of Lloyds, would, I should have thought, be appropriate for a risk which is altogether greater than that which arises when one invests in a building society.

Mr. Mitchison: The point seems to me to be the same in both cases. What about the Law Society and defaulting solicitors?

Mr. Erroll: I have noticed an increasing amount of adverse comment by the larger solicitors on the ground that they are being called upon to pay up to meet the defalcations of defaulting solicitors.
In any case, however, there is a very severe practical objection to accepting this proposal because it would require a considerable amount of consequential legislation of a sort outside the scope of the present Bill. Building society powers for investment are limited under Section 25 of the Building Society Act, 1874, as amended by Section 17 of the 1894 Act, to trustee securities. Thus a building society cannot make loans to other societies in need, nor can it contribute to a pool for the purpose of aiding other societies because that would not itself have trustee status, If any society approved under the Bill got into difficulties its own trustee status would probably


be withdrawn, so it would not be possible for other societies to invest in it either individually or as members of a pool. Be that as it may, we on this side of the Committee feel that the danger of an approved society running into difficulties is likely to be very small indeed. It is the purpose of the conditions set out in Appendix II to make certain that the risk is absolutely minimal.
The right hon. Gentleman referred to several matters appertaining to building society legislation which he wished had been covered in the Bill and which he would like to have seen much broader in scope. The fact remains that the Bill is limited in scope to the purposes that were outlined on Second Reading. The question of a pool fund is one of those broader issues which might have been properly considered on a Bill to amend building society law generally.
The Government are considering the question of the possible need to amend building society legislation. Therefore, any proposal to set up a central guarantee or pool fund, whether on the lines suggested by the Amendment or on any other basis, would properly fall to be considered in the context of a general amending Bill. In view of the explanation I have given, I hope that hon. Members opposite will not wish to press the Amendment any further, as, clearly, it would not be practicable to introduce it into the Bill.

Mr. H. Wilson: I am sorry that the Economy Secretary, at least until the last few minutes of his reply, argued his case on so narrow a front. He seemed to suggest that the building society legislation was finalised in 1894 and that whatever was appropriate in the days of Sir William Harcourt is considered appropriate today, and that although this major approach has been made, completely changing the basis of the building society movement by means of public money, whatever restrictive practices were forced by the Government upon the building society movement in 1874, as amended by the 1894 Act, would be appropriate today.
I am sorry that the hon. Gentleman took that view. I can understand him arguing—in fact, I anticipated this when moving the Amendment—that it might not be the right way to do what we propose and that it is arguable perhaps that

it should not be made a fifth condition for the granting of trustee status. Although I considered the hon. Gentleman's arguments to be fairly thin when he was talking about insurances and guarantee funds, that was why I perceived a little glimmer of light towards the end of his speech. I cannot accept his argument that an insurance fund of this kind would be an incentive to bad management. He might as well say that none of us should be compulsorily insured against third party damage, because it makes us more careless with our driving.

Mr. Erroll: Perhaps it does.

Mr. Wilson: I do not know. Having regard to the consequences to any sufferers from, perhaps, not bad driving, but pure accidents, the hon. Gentleman will, however, realise the desirability—indeed, the necessity—of compulsory third party insurance. Perhaps there ought to be a little more third party insurance in the building society movement. The hon. Gentleman, however, says that it is not appropriate to do it in this Bill. That is one reason why we regret that the Government did not approach the whole business on a broader front.
I would like to make sure that I understood the purport of the hon. Gentleman's last few words. Did I understand him to say that the Government are considering the whole question of building society legislation and the restrictions laid upon the societies under present legislation? If so, what is happening? Are the Government currently having talks with the building society movement about it? Are they proposing to set up, as might be appropriate, an independent inquiry into the 1894 Act, the 1874 Act and all the rest, to bring legislation before the House?
Before we can decide our attitude about the Amendment and the hon. Gentleman's reply, can he take us a little more into his confidence? Are the Government currently having discussions or are they merely thinking about it in the vague sort of way that we sometimes hear from Treasury Ministers during a Finance Bill and never hear about it again afterwards, or have they actually had discussions? Will he enlighten us a little more?

Mr. Erroll: I would not like it to be thought that the only legislation appertaining to building societies was passed


in the nineteenth century. There has been legislation in this century, notably the 1939 and 1940 Acts. As regards my earlier concluding remarks, I will go no further than to say what I said then, that the Government are considering the question of possible need to amend building society legislation generally.
5.15 p.m.
We have, naturally, maintained contact with the building society movement, but I would not go so far as to say that anything in the nature of definite discussions are taking place at present. It is a question of doing one thing at a time. We are anxious to see the Bill through and to see how it works before going further. That is as far I can take my earlier remarks.

Mr. Mitchison: I intervene, first, to make it clear that in this Bill we could propose nothing more than something on the lines of the Amendment. We were restricted to the cases in which there was a Government advance and a question of trustee status. We could not, therefore, deal with the building society movement as a whole. For that reason, if it is possible to get a satisfactory assurance from the Economic Secretary, we should much prefer that than to press the Amendment.
We recognise that because of the character of the Bill the Amendment is necessarily limited and more limited than we should wish it to be if we had a free hand in imposing conditions on a broader basis. The main question, however, seems to me to be this. There is a most serious public interest in securing and maintaining public confidence in building societies. They have rendered valuable service, as we all know. Unfortunately, almost every year—I do not want to exaggerate, but that is about right—there is financial trouble with some society or another. Sometimes it is a large society, sometimes a smaller one.
We fully recognise that the type of societies about which there is likely to be trouble are probably not those who would apply for, let alone secure, trustee status under the Bill. What happens at present, however, is one of two things. Either the society is left entirely to itself, in which case the people who suffer are the depositors and the general public's confidence in the building society movement

suffers, too. Otherwise, the only alternative is absorption.
There has been trouble lately about absorption. We had the rather new phenomenon of a number of societies competing in what came to be as near a take-over bid for one society as, I suppose, one could have in the building society movement. I am not saying whether it was good or bad, but it wants to be looked at. When one finds that the only alternative to bankruptcy, liquidation or whatever one calls it, is absorption, surely we must look a little bit further.
I should like an assurance from the hon. Gentleman that his and the Government's consideration of this matter will definitely include some form of collective assistance for building societies in difficulties. I do not ask him to give an assurance that he will accept it, but I hope that it will be considered.
I would add one other thing. A distinguished city gentleman, not having read Edward Gibbon as he should have done, recently compared the Prime Minister to St. George. Gibbon has a little to say about St. George. The hon. Gentleman will remember the story. The dragon was about to eat the lady when St. George rescued her. If the only remedy for ladies in distress is to be eaten by a large dragon—that is to say, a larger building society—surely the comparison with St. George must be very malàpropos. Let us hope that the Economic Secretary and the Government will devise some rescuer for distressed building societies by other means than eating them.
Can we have an assurance from the hon. Gentleman, to put it very shortly, that the Government will consider the possibility and the advisability—I am not asking them to accept it—of collective assistance for building societies in financial difficulties?

Mr. Erroll: I should like to stick to the assurance which I gave earlier, that we will consider the question of a possible need to amend building society legislation generally. If it was felt that there was a desire for such a collective fund or pool fund and that it was necessary to place that on a legislative basis, it would be considered along with everything else. That is as far as I can take the Committee.

Mr. Mitchison: The hon. Member has not been very definite. Will the Government consider whether it is right that there should be provision for financial assistance? It is not merely a question of what the building societies want. It is a question of what is right in the public interest, and that means the depositors and the investors.

Mr. H. Wilson: We are in some difficulty about knowing whether to press the Amendment. The Economic Secretary has moved a little in the direction we want, but we want him to be more specific. We are more than willing to withdraw the Amendment if we feel that something will come out of doing so. All that the hon. Gentleman has said, in fixed terms, is that the Government will consider the desirability of any changes in building society legislation. I asked him whether the matter was being discussed. He has not yet told us. I understood him to say that the present view of the building societies was against a pool of this kind. How he got to know that if the matter has not been discussed with the building societies I do not know, unless he has done it by some form of telepathy.
I wish that the hon. Gentleman were not so rigid in sticking to the form of words which he used. He is a very independently-minded Minister, as he showed us last night when he bowed to the wishes of the House, quite rightly and very graciously. He was given a form of words a week last Thursday, or whenever the brief was prepared, and he has read those words as inflexibly as the American Secretary of State. The difference between him and the American Secretary of State is that the hon. Gentleman can understand arguments when they are put to him.
Arguments have been adduced this afternoon and I should have thought that in the light of those arguments he would be prepared to say that he would look at the matter again, not merely the question of a pool, but, for instance, a question to which he drew attention, the right of building societies to give loans to or invest in other building societies to help them over a difficult period.
Entirely without commitment—this will not cost him anything—will the hon. Gentleman look at the specific problem before deciding to recommend legis-

lation? If he will give such an assurance, we will be prepared to withdraw the Amendment. Will he give an assurance that he will look at the problem in those terms?

Mr. Erroll: I was anxious to ensure that the Amendment did not appear in the Bill since it was not appropriate to the Bill. The right hon. Gentleman has suggested that the Committee should divide on the much wider issue of whether we should consider the whole broad question of the setting up of a central fund or pool fund.
Nevertheless, to show that I am trying to be as helpful as possible, I shall he glad to give an assurance that we will consider the matter, as the right hon. Gentleman said, without commitment. We shall certainly consider the matter on the broad lines which have been outlined this afternoon. I therefore hope that the right hon. Gentleman will not seek to press the Amendment to a Division.

Mr. H. Wilson: Since the latest piece of paper received by the hon. Gentleman has enabled him to be a little more accommodating, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. W. R. Williams: I beg to move, in page 1, line 9, after "society", to insert:
has according to its latest annual account and statement assets amounting to not less than one hundred thousand pounds and".

The Temporary Chairman (Sir Robert Grimston): It may be convenient with this Amendment to take that in page 2, line I, leave out from "as" to "he" and insert:
are set out in the Schedule (Conditions on which the Chief Registrar shall have power to approve building societies for purposes of trustee status) to this Act".
and that in line 2, after "section", insert:
provided that he shall not withhold approval of a society solely on the ground that the total assets of the society amount to less than five hundred thousand pounds".

Mr. Mitchison: Will it also be convenient to include the Schedule mentioned in the first of those two Amendments?

The Temporary Chairman: Yes.

Mr. Williams: I hope that the amiable relationship between the Minister and my hon. Friend will continue during our discussion of this matter, since this is a very important amendment for many of the building societies. On studying the Bill, and after consulting some building societies, it seemed to me that there were at least two defects in connection with the proposed agencies. The first was the reluctance of the Minister of Housing and Local Government to make the fullest possible use of local authorities in connection with this scheme. I cannot discuss that on this Amendment, but I thought that I had better place on record the fact that I regard that as a defect in the scheme.
The second defect relates to the building societies which are made the appropriate media for carrying out the provisions of the Bill. My Amendment deals with what we regard as the discrimination between the larger and smaller societies. We consider that that bias is both unfair and unhealthy for the scheme itself.
The purpose of the Amendment is to enable the Government to have second thoughts on the subject. We hope to convince them that the scheme will benefit considerably if we apply to it the traditions, experience, knowledge and administrative capacity of many of the comparatively small societies. Hon. Members will know that the Treasury requirements for the selection of societies for the scheme are set out in Appendix 2 of the White Paper. One requirement, and perhaps the basic requirement, is that the total assets of a selected society must not be less than £500,000. We regard that figure as very much too high and we suggest that it should be not less than £100,000.
I am not sure whether the decision to fix the figure at £500,000 is attributable to the Government's acceptance of a proposal by the building societies movement that they should give trustee status to deposits. If that is so, and if that is the principal reason, I am sure that the smaller societies never envisaged that that would result in their exclusion from a progressive scheme of this kind.
5.30 p.m.
In his Second Reading speech on 15th December last year the Minister laid great stress on stability. It was right

and proper that he should do so, and my hon. Friends and I wholeheartedly agree with him. Stability must be the basic requirement of any scheme of this kind. I also agree with the Minister that trustee status must not be lightly conferred on any society, be it large or small. The Minister of Housing and Local Government admitted that size does not of itself ensure stability; how right he was. History fully supports him. Experience here is the same as in the boxing field; the bigger they are, the heavier they seem to fall.
Had the Minister issued, in the Bill, instructions to the Chief Registrar of Friendly Societies to apply the common test of stability to every society, whether large or small, we should have no quarrel with him on that aspect of the matter, and I feel sure that the smaller societies would have had no cause for grievance or complaint. Then, the conditions would have been common to all societies and would have been fair all round.
The Parliamentary Secretary started to wobble from this very firm line when he said that as a general rule the larger enterprise was more stable. I am not too sure that he has good grounds for such a broad generalisation as that. I should have thought that the Minister and the Treasury would agree that one important test of stability was longevity. The length of time that a concern has been in business without any default or failure and with no defection, should be one good test.
I have tried to test the case put forward to me by the smaller societies from this angle. I have taken the trouble to look through the "Building Societies Year Book" for 1958 and it was a very interesting experience, because I came across some very interesting facts which have encouraged me still more to put down this Amendment and to ask my hon. Friends to support it. I found out from that book that quite a number of these very small societies had been in existence for well over three-quarters of a century. Some of them are nearly one hundred years old. They have a long record and, as far as I can detect, there have been no failures whatsoever in connection with their work or administration.
As far as I can see, they have served successive generations, many of them generations of working-class men and


women in industrial areas in this country, through good times and had, through booms and slumps. They have given first-class service, and most of them have very progressive outlooks. They have been able to meet the ever-changing requirements and needs of their shareholders and of the people who have deposited money with them.
I shall not weary the Committee with quotations from the Year Book, but I would refer to three or four of these societies on the question of longevity. The Gainsborough Society was established in 1870 and was incorporated in 1910. The Grantham Society was established in 1875 and was incorporated in the same year. The Grimsby and Cleethorpes Society was established in 1866 and was incorporated in 1875. Now comes my own personal interest when I refer to a very well-known society in my own constituency, the Failsworth Permanent Building Society, which was established in 1876 and was incorporated in the same year.
I claim that this long existence, without trouble or failure whatsoever, reflects not only the stability of those societies but the confidence which thousands of ordinary men and women have reposed in them for that long time. Thousands of people have trusted these smaller societies, but the Minister of Housing and Local Government, and the Chancellor of the Exchequer, through the Treasury, do not trust them.
When I look at examples like this, I become very doubtful about the claim of the party on the Government benches to look after the interests of the small man and the small businesses. We hear quite a lot about that. It is clear to me, in this case, at any rate, that the small society is being sacrificed to big business, to the big fellows. It seems queer that the Tories, who always claim to believe in decentralisation, are forcing centralisation by means of this Bill, in connection with their scheme.

Mr. Graham Page: I do not intervene obstructively, but constructively. I do not Think that the hon. Member mentioned the assets of the small businesses, but it would complete his argument if he could do so.

Mr. Williams: I am obliged to the hon. Gentleman for trying—I say "trying"—to be constructive. I was dealing with the long existence, the longevity, of the

societies, but, if necessary, I could get figures to prove that their status and assets are quite sufficient. If the hon. Member will wait a little longer I can get the figures for the Failsworth Permanent Building Society, which I regard as typical of the societies of which I am talking. He will find that I can tell him not only the assets, but the reserves as well.
When the Government have a few plums to distribute they do not look at the smaller societies but at the big fellows, whose only advantage, as far as I can see, is size and size alone. There seems a large measure of ingratitude on the part of the Government in their attitude towards the smaller societies. It is accepted that in past years it has usually been the smaller societies, with their local conditions and personnel, which have responded to the appeals of successive Ministers of Housing and Local Government to advance loans on the older types of property.
The larger ones and the more centralised and regionalised ones, during the same period, seem to have laid down very firm, and, in many cases, harsh, limits of property age, irrespective of the actual condition of the property itself. I imagine that they have laid down those harsh conditions because they wish to avoid allowing their local officers and offices to discriminate between types of older properties.
It seems, therefore, a little unfair that the larger societies, which have been so lukewarm in trying to deal with these social problems in the past, will, under the Bill, be reaping where they sowed not. That is very unfair. The smaller societies are solidly behind us in this Amendment because they feel they have not been treated reasonably well nor with any degree of gratitude. They took the risks, but the larger ones are now reaching out for the fruit.
I am informed that the standard laid down by the Building Societies Association for a society to be regarded as sound enough to qualify for membership of that Association provides minimum requirements of 2½ per cent. reserves and 7½ per cent. liquid assets. The Committee will know that the Association does not ask anything about the size of the society, but simply asks what its reserves and assets are. If they reach 2½ per cent. and 7½ per cent. respectively, it is accepted into full membership of the Association.
I should think that the Association is very jealous of its reputation and very keen to ensure that membership brings with it stability, honesty, integrity and all the other qualities. Therefore, I cannot see why a higher standard, or a different standard, should be imposed by the Minister and the Treasury than the one imposed by the Association about the standing, stability and strength of a particular building society.

Mr. Fisher: I do not, of course, claim to speak for the Building Societies Association—I have no right to do so—but I should be very surprised if the Association would agree to so low a limit as £100,000 in the matter of size. I do not think that it has said that and I do not think its wishes are that the limit should be so low.

Mr. Williams: I said that I was informed that was the position. It is no use the hon. Member shaking his head. I have been informed by one of the building societies, which actually is a member of the Association, and the figures I have quoted to the Committee are those given to me by a member association of the general Association of the building societies. If the hon. Member has any better information than that, no doubt he will disclose it to the Committee. I said that I was informed that was the case and I have given the source of my information. I am inclined to think that the information is correct.
I should perhaps answer the points raised by the hon. Member for Crosby (Mr. Page). The Failsworth Society qualifies easily for membership of the Association, with assets of £¼ million and reserves of £12,000. Judged from a purely arithmetical viewpoint, the Fails-worth Society is at least twice as sound as the basic requirements laid down by the Minister for the larger building societies. I believe that what is true of the Failsworth Permanent Building Society is equally true of many other societies I have mentioned.
5.45 p.m.
I wish to refer to some words uttered by the Minister of Housing and Local Government in the Second Reading debate. The right hon. Gentleman said:
… it is claimed that many smaller societies have got balance sheets just as strong as the larger societies.

The right hon. Gentleman added:
I certainly do not disagree with that.
If that is so and he agrees that, comparatively speaking, they are as strong as the others, it seems quite unfair and unjustifiable that they should be excluded from the Bill. Finally, there is the adverse effect on their future of the decision of the Government to exclude these smaller societies. I am sorry to have to quote the Minister again. In the same speech he said:
It is also said that to exclude the smaller societies from this will lead to withdrawals of deposits from them and to their ultimate disappearance.
He went on to say:
The smaller societies play a valuable part in attracting savings, especially from local people, and I do not believe for one moment that to exclude them from this scheme will hamper them."—[OFFICIAL REPORT, 15th December. 1958; Vol. 597, c. 789.]
The right hon. Gentleman may honestly believe that, but, of course, he is not personally affected and he can well afford to be optimistic in what he is going to believe. I tell him that his optimism is not contagious among the smaller societies. His optimism is not shared by those who will have the responsibility of guiding the societies' work in future and of having regard to their requirements. I am here this afternoon to tell the Committee that the smaller societies, the Failsworth Society, in particular, feel aggrieved and frustrated. They feel there is great danger that many of the deposits which would come to them if they were allowed to take their rightful place in this developing scheme will not come to them. They have been frustrated and they should have been in the scheme.
I appeal to the Minister to give very careful consideration to this feeling of the small societies. I remember that when I was a young lad in Wales, Welsh people had to rely a great deal on them. I know that in industrial Lancashire they had to rely on them to a large degree when many of the large societies were not in existence. I ask the Minister to give serious consideration to my plea. I say "plea" advisedly because they could do great work in this scheme and I think it a great pity that a place has not been found for them.

Mr. Maurice Macmillan: I do not propose to detain the Committee for very long, particularly after the very


able argument of the hon. Member for Manchester, Openshaw (Mr. W. R. Williams) about the rights and uses of small societies. For various reasons, which I think are perfectly obvious, I cannot quite go along with him in thinking that the qualifications for membership of the Building Societies Association must necessarily be the same as the qualifications for trusteeship status. Various societies may well he excluded on those grounds. Nor am I quite happy about his proposal to isolate one condition out of the four referred to by the Economic Secretary and put that one alone into the Bill. That is why I have tried to link this particular condition of size to those others which are specified in Appendix II of the White Paper.
I hope that the Minister will at least be able to do something, if not on the lines we suggest this afternoon, to help the smaller societies, particularly as it is not only the question of qualifying for the loan but of trusteeship status.
During the Second Reading debate the Parliamentary Secretary, while admitting that size does not necessarily mean that a concern is sound and stable, said that in judging industrial companies as fit for trustee investment the criterion of size of about £1 million was not uncommon. I would respectfully submit to him that the criteria suitable to an industrial or commercial undertaking are not necessarily those which are suitable to a mutual undertaking such as a building society In any case, in this particular instance, the other criteria which are set out in the White Paper are added to that which would normally obtain with an industrial investment society.
Apart from all that, the Bill is so worded that it says only that the Registrar may grant trusteeship status. It is therefore obviously open to him to exclude a society even if it fulfils all the other criteria, unless I am completely wrong in my reading of the Bill. To some extent the reserve ratio that is demanded of a building society to qualify for trusteeship status in itself contradicts the need for the size criterion to be quite so stringent. In imposing a lower limit to the percentage of free reserves, the Minister is implicitly saying that size is not all, for it is, as has been pointed out before, the smaller societies that do, in

fact, have bath larger percentages of free reserves and larger percentages of their funds as liquid assets. I therefore suggest that in the new Schedule which stands in my name, perhaps a way out of this difficulty could be found by combining the criterion of size with the criterion of reserves, and that if we are willing to lessen the safeguards on the one hand we do so only to the extent that we tighten them up on the other.
Before I actually turn to the Schedule itself—and I understand that I am in order in so doing—I should like to say one word about the position of the smaller societies. I do not think anyone in the Committee has any doubt that they are worth-while organisations. The Minister said quite rightly that trusteeship status was not to be granted lightly. I think also that we in this House should take the point that it is not to be withheld lightly either. In some way that is what we are in danger of doing by insisting on such a rigid criterion of size.
It has been brought to my attention that already advertisements and several mentions in the Press have been made implying that certain societies at least, under the terms of the White Paper, would have been worthy of trusteeship status, with the obvious implication that others which did not fulfil the White Paper's criteria would not. Whether we like it or not, this introduces an element of discrimination, however unintentional, which inn the long run, to put it at its lowest, will not benefit the smaller societies.
There is a further point which I have made before and to which I should again like to draw the Minister's attention. This system is giving an incentive to societies which are very nearly but not quite large enough in their total assets to increase their assets. I do not see how they can do that without having the incentive also to increase their profits and maintain the higher rate of mortgage. It is surely contrary to the spirit which underlies the whole building society movement to encourage a society to direct its policy to attract funds and then decide on the terms it can offer rather than see how much it can provide a needed service with the money which is available.
With regard to the smaller societies, the hon. Gentleman the Member for Openshaw pointed out that many of them are long-lived, an issue which I do not think is


very relevant in the case of a larger society but which is certainly relevant in the case of a smaller society which must be sound if, even at a low level, it has been continued over a long time without difficulties. They are also more local. They are more concerned with the individual who wants to buy a house to live in, rather than with helping to finance builders' operations for selling owner-occupier houses in large quantities. They have done a great deal more of this business in connection with the older and cheaper property, the type of property selling at £600 to £700 as opposed to £1,600 and £1,700. These tend to be working-class as opposed to middle-class houses. They tend to be terraced houses and to be nearer where people work rather than in the suburbs or near the estates. Despite the fact that the 500 smaller societies were doing only 3 per cent. of the total building society business, they were doing 12½ per cent. of the business of this nature in pre-1919 houses. They are being precluded by this Bill from taking a further part in that part of the business in which they already play a not inconsiderable rôle in the building society movement.
On the Second Reading debate, I felt that the whole question of trusteeship status was too important not to be laid down in detail in the Bill and too important to be left in vague terms which were open to change. Now I am not so sure. Certainly I do not think that it is wise to lay down and specify one of the four criteria mentioned by the Financial Secretary. The main reason why I have put down the proposed new Schedule is not primarily to lay down in the Bill conditions on which the Chief Registrar shall have power to approve building societies but to find some means of trying to introduce a link between the question of the size of the total assets and the proportion of those assets held as free reserves.
6.0 p.m.
In its essence the Schedule which is down in my name is Appendix II to the White Paper. There is in principle no difference at all, and I have introduced no new criterion and no new condition for granting trusteeship status. What the Schedule does is to alter two of the conditions as set out in the White Paper so as to make possible the inclusion of some smaller societies, provided that those

smaller societies, in return, so to speak, for the size qualification being relaxed on their behalf, can meet more stringent conditions as to reserves.
I have suggested these conditions somewhat arbitrarily, I must confess to the Committee. In so far as the total assets of the society were those as laid down by the size criterion of £500,000, the proportion of free reserves would be the same, that is, 2½ per cent. For the smaller societies, between £250,000 and £500,000, perhaps a figure of 3½ per cent. would be more suitable, and if one were to include societies between £100,000 and £250,000, the building societies' own suggested figure of 5 per cent. could be used. In parenthesis, I am aware that the 5 per cent. as envisaged by the building societies and the 5 per cent. as envisaged by the Government are not the same, because they are not calculated on the same basis.
The rest of the somewhat long-winded Schedule is merely taken up with extending the rate at which societies shall reach the required percentage of free reserves to cover the three separate categories, and it is consequential on the initial Amendment.
I do not think that I can press my Amendment, because I realise that it may not be desirable to limit the Minister too much in setting out the qualifications for trusteeship status. It has already been suggested that, although a size criterion of £500,000 might be desirable now, there might come a time in the future when that qualification could be relaxed. I, for one, should be very reluctant to press an Amendment which would make such a thing more difficult. Nor do I claim that the Schedule as set out on the Order Paper is right or, indeed, workable. I must confess to not having sufficient technical knowledge to know in detail whether it is.
I hope that the Minister will examine the whole question of the smaller societies in order to ascertain whether there is not some method by which he can extend trusteeship status to those among them which deserve it. There seems to be a general feeling that, although we should like to extend it to many of them who deserve it, we do not see how it can be done. I ask the Minister whether he can find a method of doing it, even if it means requiring further safeguards from the


smaller societies in other directions, and even if it means that he cannot do it now but can hold out some hope for the future that they, too, will be able to have the benefits of trusteeship status which, we all agree, the work which they have done for the movement has earned them.

Mr. Roderic Bowen: I rise to associate myself with the observations of the hon. Member for Manchester, Openshaw (Mr. W. R. Williams). I also agree with most of what was said by the hon. Member for Halifax (Mr. Maurice Macmillan).
Before I make any further observations, it is my duty to declare my interest in these Amendments. I am a director of a small building society which would be affected if they were carried. It seems to me that it is quite unreasonable to exclude the smaller, stable building societies from taking part in the implementation of the Bill. As I see the position, the Bill itself does not provide for any exclusion on size, but it is intended that the regulations should be on the lines of Appendix II of the White Paper, which refers to the total assets of a society as being not less than £500,000.
If the regulations are framed on those lines, I understand that about two-thirds of the building societies now operating in this country will be excluded solely on the basis of size. We have not the regulations before us, but, as I understand the position, the regulations will give the Chief Registrar the power to approve a building society, provided that certain conditions are complied with; that is to say, he is not required to approve a building society simply because it complies with these regulations. He will still have an overall discretion whether a society can bring itself within those regulations.
All we are asking, as I understand it, is that there should not be a rigid limitation based solely upon size. The Chief Registrar will have complete discretion to decide whether a society which is smaller than those at present considered suitable for the implementation of this Bill will, in fact, be a suitable instrument. It seems to me that the Government should welcome the additional facilities for implementing the Bill which could be provided by solid, stable building societies with excellent records of public service

which are at present excluded solely upon the ground of size.
I do not wish to repeat all the arguments. Most of the ground has already been covered extremely well, but I should like to associate myself with one or two points which have been made, in particular. There can be no doubt that the effect of regulations on the lines of Appendix II 2 (b) would be to put the smaller societies, those which did not qualify for trusteeship status under the Bill, in an unfavourable light as compared with the societies which came within its scope. I feel that this is extremely unfair to societies which have rendered a great public service, particularly in the field with which we are concerned with this Bill, namely, public help in relation to the purchase of older types of houses.
What will be the effect if there is this rigid qualification as to size? It will encourage building societies to expand at the expense of reserves. That is one of the effects. It is interesting to note that the building societies in this country which have the fastest expansion record are those, in the main, which have the lowest reserve ratio. That is something which should be deprecated.
Incidentally, most of the smaller societies can comply with the provisions about reserves contained in the White Paper. Indeed, they far more than comply with them. In one examines their balance sheets in that respect one finds that they come out of the examination far better than many of the much bigger societies.
If we lay down a size test, we shall encourage amalgamations undertaken with the sole object of qualifying for trustee status and Exchequer advances. The swallowing up of these smaller societies by bigger societies, or a movement whereby two or three societies come together for that purpose, should be deprecated. These small societies, carrying out their work largely through local, personal, intimate contacts, have rendered a service that the larger, more remote and impersonal societies would find it difficult to give. The Government should certainly not artificially foster a squeezing-out of the small building society, which would be the effect of the regulations proposed in Appendix II of the White Paper.
I hope that, on second thoughts, the Minister will decide that he can make use of these small societies in implementing this Bill, and will realise that he can rely upon the discretion of the Chief Registrar in deciding which societies, irrespective of their size, are, by their record, their present balance-sheets and the whole history of the operations, fit for trustee status and to deal with the Exchequer advances envisaged in this Bill.

Mr. Norman Cole: I want to support what has been said by my hon. Friend the Member for Halifax (Mr. Maurice Macmillan). We have been very much emphasising the size of the assets of these societies, but a number of other criteria have to be met before a society is approved for trustee status. Those criteria are reasonably stringent. I suggest to my hon. Friend the Economic Secretary that the size of the assets may be one consideration, but another is the general soundness of the society as represented by the degree to which it meets those criteria.
My hon. Friend the Member for Halifax put this very fairly, indeed, when he said that this granting of trustee status should not be lightly withheld, any more than it should be lightly given. It is something that should receive very serious consideration. Numbers of these small societies, whose longevity and stability have already been emphasised, cannot meet the criterion of size of assets. Although the other criteria contained in the proposed regulations are more than met by the small societies they have not, at present, assets amounting to £500,000. I imagine that when their assets reach that figure they will be included, but that could be some time ahead.
I therefore hope that the Economic Secretary will look at this again. This is the time to do it, when we are starting this great new operation. He would give a great boost to the work of the building societies as a whole, large and small, but particularly to the smaller ones. If it is not possible to do this when the new regulations are framed, I should like him to assure the Committee that this matter will receive consideration after six, nine or twelve months' working of the Bill.
It is very important that we should not lightly lay down an arbitrary line that excludes societies which have everything except size—longevity, stability, respect and esteem, and the character of their work—to recommend them, Indeed, in the work they have been doing for just this older kind of property to which the Bill applies, they have been doing excellent service.

6.15 p.m.

Mr. Fisher: I recognise that we are in a difficulty with the Bill as it stands in that building societies must have assets of £500,000 to qualify for receipt of Government loans and, more particularly, for trustee status for investments.
It is that that is really worrying the small societies. It is a very real difficulty, because, applying this £500,000 standard, only about 150 of the 341 societies which are members of the Building Societies Association will be able to participate under the Bill, or obtain trustee status for their deposits. That is not because the majority of them are in any way unsafe or disreputable. They are no doubt admirably run, and probably have a good ratio of reserves and a high liquidity. It is simply because they are small local societies; and, as such, will be excluded on grounds of size alone.
These smaller societies will not mind very much if they do not receive the Government loan money for the advances on the older pre-1919 houses. That is not a particular attraction for any society, whether it be large or small. The Government loans will be made at a rate only ½per cent. lower than the building societies charge their borrowers, and that ½per cent. margin between the rate at which they lend and the rate at which they will borrow barely covers the cost of administration. Administrative costs, on average, are about 0·55 per cent. Therefore, if anything, the average building society will be out of pocket under the Bill, and will certainly not have anything left over for provision for reserves or taxation. No building society will do very well out of the Government loan money—

Mr. Mitchison: That may be the average rate but, of course, in other cases it covers advertisements, which do take a considerable part of the expense.

Mr. Fisher: I appreciate that, and I am grateful to the hon. and learned Gentleman for pointing it out.
One asks oneself why the smaller societies are so anxious to be included, and I think that the undoubted reason lies in the trustee status which is to be conferred. That is the only reason, because in return for a great deal of extra work and responsibility which the Bill places upon them the Government have given the building societies the quid pro quo that they have long desired and to which they have long felt entitled. My hon. Friend the Member for Aldershot (Sir E. Errington), whom I am sorry not to see in his place at the moment, sought this for them in his Trustee Investment Bill in 1956.
Those of us who supported him on that occasion thought his plea well justified, not only from the point of view of the building societies but from that of trustees and the beneficiaries of trusts. We thought then, and I still think, that shares in building societies are a far better and safer investment today than undated Government stock. Those of us who have lost money in Consols or 3½ per cent. War Loan or 2½ per cent. Treasury stock feel that very much.
Trustee status will bring in trustee investment. It will bring in a new flow of money to those building societies which qualify for it. That is why they want inclusion, and that is why the smaller societies want the £500,000 limit reduced. Inclusion will mean more funds, but exclusion will mean, not enhanced but diminished status. Instead of the advantage of more funds flowing in, the smaller societies will actually have the positive disadvantage of appearing—only appearing—in the public mind as being less safe than the slightly larger society which, perhaps, only just qualifies under the Bill. That, I think, is the real rub of the smaller societies' grievance.
Nevertheless, we must have certain standards for trustee status. Obviously, there must be a minimum figure of reserves. Obviously, societies must have a whole-time manager or secretary and operate from a recognised and separate office of their own. Also, there must be some size requirement. That is why I cannot support the Amendment in page 2, line 2, in the name of the hon. Member for Huddersfield, West (Mr. Wade) and his

hon. Friends, because that suggests no size limit at all. The hon Gentleman the Member for Manchester, Openshaw (Mr. W. R. Williams) and my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) suggest a limit of £100,000. I myself regard that as still too low for trustee status. I should have been willing to accept a figure of about £250.000 or £300,000, but not lower than that.
Trustees have a very serious responsibility to their beneficiaries and, indeed, the Government have a serious responsibility to the trustees. I think I am right in saying that the standing of a borrower whose securities have trustee status is controlled by the Treasury, and quite rightly so. I believe that it should remain so. At whatever level the size limitation is fixed, there will always be complaints from certain local societies which just fall below it. That is inevitable. It is very bad luck on those smaller societies which just happen to fall outside the requirement. I acknowledge that, but, after all, this Bill is not designed for the benefit of building societies, whether they be large or small. It is an important and extremely wide-ranging. Government Measure. If the Treasury feels that it cannot go below the £500,000 limit in the trustee context—and there is a great deal to be said for that view—I do not think we should press my hon. Friend to concede these Amendments.

Mr. James MacColl: I have listened with very great care and attention to what has been said, because, unlike most hon. Members who have taken part in the discussion, I have no connection at all with building societies. I have neither lent money to one nor borrowed money from one, and I have had no connection with the building society movement.
I am bound to say that the trend of the discussion has left me very much concerned about what is proposed. It is all very well for the hon. Member for Surbiton (Mr. Fisher) to say that the Bill is not intended to benefit building societies. In fact, of course, it will be for the benefit of building societies which attain trustee status under it. Whatever may be the motive or the intention behind the Bill, the fact remains that the Government are dispensing a favour; they are giving a privilege and a piece of prestige to certain selected building


societies which will be bound to influence people who are minded to lend them money.
Most people do not know what trustee status means, and they know precious little about how institutions acquire trustee status. What they do know is that some society has trustee status, and that that is a respectable institution, whereas another society which is not able to advertise that it has trustee status will inevitably, by implication, be regarded as less respectable and not as good for investment.
It must be common ground that that distinction is not a true one. The larger societies are not, for that reason, more efficiently run or more solvent. It may well be that a small society is far more effective and valuable and better run than a large one. It is an extremely dangerous thing for the Government to do anything to encourage among investors the feeling that a lot of chromium plate, a large building and a great deal of advertising —the sort of things associated with big institutions—indicate solvency, prudent management, and so forth. The public should be encouraged to feel that solidity, worth, good character and good management are the qualities which really matter to those who wish to invest money. Therefore, for the Government to go out of their way to give this special privilege attaching to size seems to me to be most imprudent.
The hon. Member for Surbiton produced the usual argument that one has to draw the line somewhere and, wherever one draws it, people will complain because they happen to come below it. The answer to him is that if one has to draw the line somewhere, most societies, which are well run and solidly managed, should come on the right side of it. It is quite plain that the figures which the hon. Gentleman himself quoted about the members of the Building Societies Association show that many of them, which are thoroughly well-run organisations, would be on the wrong side of the line as it is proposed to be drawn. That, surely, must be an argument against such a limitation.
It is wrong for the Government, just because they want to carry out a policy for their own ends, to discriminate by the Bill against the worthy, honourable and

well-run societies, and I feel that they ought to consider the matter again.

Sir Cyril Black: I am sure that all hon. Members sympathise with the plea which has been addressed to the Government to consider whether something can be done to ease the situation of the smaller building societies under the proposals of the Bill. It is fairly general ground, I think, on both sides of the Committee that there should, at any rate, be some size requirement governing the conferment of trustee status. The hon. Member for Manchester, Openshaw (Mr. W. R. Williams), whose speech, if I may say so with respect, was a very appealing, moderate and reasonable one and to which I listened with very great care and interest, pleaded not that there should be no size requirement but that the size requirement of £500,000 which the Government propose is too high and that a more appropriate figure would be £100,000, as he proposes in his Amendment.
It is, of course, a fact that wherever one draws the line, at £500,000, at £250,000 or at £100,000, there will always be societies which fall just below it which will experience the disappointment and even the indignation which has been expressed this evening on behalf of those who happen to be just under the £500,000 line. By reducing the size requirement, one may reduce the number of societies feeling disappointment because they happen to fall just below it, but, if there is a size requirement at all, it necessarily follows that there will be some above the line and some below it. Those below it will, of course, feel disappointed. The problem is not solved by reducing the size requirement to £100,000 or to any other figure, although the scope of the disappointment may be reduced thereby.
I feel that it may have been inferred from some of the speeches that the limitation of £500,000 was something desired and supported by the larger societies as being in their interests and to the detriment of the smaller societies. The Committee will know, I think, that I have been a director for about twenty years of one of the larger building societies. I know fairly well the minds of the directors of most of the larger building societies, and I am quite certain that all who are connected with larger societies recognise that there is a very legitimate place for the


small local society. We do not want to see the small local societies put out of business. We do not want to see them in any way penalised or adversely affected by this Bill or by any Government action. In our judgment, the smaller societies play a vital part in the building society movement as a whole, and to suggest that the £500,000 limitation is something desired and supported by the large societies in their own interests is to do a disservice and an injustice to those large societies.
6.30 p.m.
A most excellent smaller society in my division, the Wimbledon Building Society, is in the somewhat strange position that, according to its last published accounts, its total assets are £482,000, so that under the proposal that we are considering it would have fallen on the wrong side of the line by some £18,000 at the end of 1957. It may well be that by the time the 1958 accounts are available there will have been a rate of growth sufficient to put it just above the line. This is a society which for many years has served the local public. No one could possibly question its stability and the security which it offers to investors, and I am sure that if the £500,000 figure were to stand some societies will feel disappointment at being just too small to qualify.
I take the view that the Bill as a whole represents a very notable advance for the building society movement. It may well be that the conditions as proposed are not precisely correct at every point—it would be strange if they were—but I do not personally feel inclined at this stage to jeopardise in any way the passage of a Bill which seems to me to be wholly beneficial in its purpose by arguing about something which, however one may regard it, is a matter of detail. But if the figure of £500,000 is adopted for the time being, I feel that an assurance should be given on behalf of the Government that it is not a once-and-for-all figure which will never be reconsidered and which can never be altered in any circumstances. If experience of the working of the Bill shows after a reasonable number of months that the limit could be safely reduced to a lower figure, I hope that the Minister will take appropriate action to reduce it.
I am not inclined to vote against the Bill on the £500,000 figure if an assurance can be given that the amount will

be reconsidered in the light of experience of the working of the Bill.

Mr. Erroll: Like my hon. Friend the Member for Wimbledon (Sir C. Black), I very much enjoyed listening to the speech of the hon. Member for Manchester, Openshaw (Mr. W. R. Williams) and I enjoyed the proposals, ingenious in detail, of my hon. Friend the Member for Halifax (Mr. Maurice Macmillan). I appreciate his modesty in saying that perhaps his proposals had not been worked out exactly correctly in detail. I assure him that I read them fully appreciating that that might be the case and I would not seek to criticise his propositions solely on the ground of accuracy or otherwise of any of the details.
I was fully aware, long before this Committee stage, that the proposed requirement, one of a number, of a minimum amount of assets to be held by a society as a qualification for trustee status and for inclusion in the scheme had aroused some criticism among members of the smaller societies. I have received many letters on the subject, some direct and some forwarded to me by hon. Members. I should like to say straight away and categorically that the proposal of the £500,000 limit implies no criticism whatsoever of the manner in which the smaller societies are conducted and in no way casts any doubt upon their financial soundness. There are many small societies whose reserve position compares favourably with those of larger societies, and I have no doubt that they are efficiently run.
However, we should not consider this proposal merely from the point of view of the building societies. We must consider the larger aspect. Trustee status is not to be lightly conferred. We have a definite responsibility to the general body of trustees, as my hon. Friend the Member for Surbiton (Mr. Fisher) said, which is entitled to regard any addition to the list of trustee investments as being of the same high standard as those already on the list.
A private organisation whose deposits are to be given this status should be of such size as to command general confidence in its financial and administrative resources. I should like to remind the Committee of the sort of company which trustee status building societies will be


joining. It would obviously be burdensome to the Committee if I were to read out the whole of the investments at present authorised by the Trustee Act, 1925, as amended.
I should, however, like to mention some of the more important trustee investments. They comprise United Kingdom and Northern Ireland Government Guaranteed Stocks, certain Dominion and Colonial Government Stocks, the Stock of the Bank of England, all securities of local authorities, certain stocks of public boards and certain prior charges of the older public utilities. Therefore, building societies which qualify will be joining a distinguished company.

Mr. Mitchison: Has the Economic Secretary investigated the present average or total depreciation of trustee securities on the books of building societies? Could he give us any estimate, either in relation to the societies with assets of over £500,000, or all societies?

Mr. Erroll: I can certainly assure the hon. and learned Gentleman that I have looked at the matter, but I would not be prepared to give him those figures at this moment.
The hon. and learned Member for Cardigan (Mr. Bowen) referred particularly to the work of the smaller societies, and in referring to a particular society he used the phrase "a small intimate society serving local needs". I do not doubt its excellence or its suitability for that purpose, particularly in a relatively remote area, but I question whether" a small intimate society serving local needs" ought to go on the trustee list which I have read.

Mr. Bowen: Should it be used as an instrument under this Bill?

Mr. Erroll: I must repeat that it is only one of the conditions that has to be fulfilled. We do not want to regard this as the sole condition. It is only one of a number. My right hon. Friend the Minister of Housing and Local Government explained this to the House on Second Reading, but I hope the Committee will not object if I repeat, with additions, the argument he then used.
As I have said, we accept that size in itself does not assure stability, but the larger the society the more likely it is

to be able to withstand economic pressures. The proposed limit of £500,000 should ensure that a society complies with all the other conditions—I should like to underline that point—as a substantial measure of financial stability. It may be argued, as has been said by several hon. Members, that we perhaps stuck at £500,000 and we could indeed come down, as one Amendment suggests, to £400,000 or, as another Amendment suggests, we could come down to £100,000.
From the arguments put forward, it would appear that the Government have taken the highest possible figure they could get away with, whereas, in actual fact, I think that we would have been entitled to take a much higher figure than £500,000. It might well have been £1 million, as I shall seek to show the Committee.
The concept of a size limit as a qualification for trustee status, whether for a private company, public company or a building society, is not new. Proposals have been made from time to time for extending the investment powers of trustees by allowing them to invest in the shares of ordinary companies. Such proposals invariably confine the extended powers to companies with a capital exceeding some such figure as £1 million or higher. This has been usually accepted in the ensuing discussion as reasonable and I have never heard such a proposal criticised on the ground that it would reflect adversely on the credit or stability of smaller companies, which, of course, would be absurd.
My hon. Friend the Member for Surbiton referred to the Trustee Investment Bill which my hon. Friend the Member for Aldershot (Sir E. Errington) introduced into the House in 1956. That Bill would have allowed trustees to invest in the deposits of building societies with assets of not less than £5 million. It is true that that was challenged from both sides of the House, but it was suggested during the course of the debate that a reasonable figure or a right limit would have been about £2 million, four times as big as the limit that we have proposed in the Appendix to the White Paper.
In short, in deciding the matter we have to strike a proper balance between. on the one hand, our desire to cover as large a proportion of the building society


movement as we reasonably can and, on the other, to safeguard the interests of trustees and their beneficiaries.
Therefore, given that the other safeguards which will he prescribed are carried through, we have thought it reasonable to keep the limit down to £500,000. This takes in an important proportion of the building society movement. It may interest hon. Members to know that the adoption of this figure means that the societies which qualify by size alone amount to about 243 societies, which together account for more than 97 per cent. of the assets of all permanent and incorporated societies.
Not all those societies will necessarily fulfil all the requirements, but on our present estimate and subject to the Registrar's final approval, we estimate that those which will fulfil all requirements and thus qualify will have assets amounting to over 88 per cent. of the total assets in the building society movement. Thus, by going down as far as £500,000, we have taken in a very large proportion of the total assets of the movement.
I can imagine an hon. Member asking whether we could not go just a little lower. If we went down another £100,000 and made the limit £400,000. in itself still a substantial figure, only 20 or 30 more societies would be admitted and they would represent a very small fraction of the total assets of the building societies. I was grateful to my hon. Friend the Member for Wimbledon for reminding the Committee of the frequent difficulty in which we find ourselves in drawing the line, because wherever we draw it there is always somebody on the wrong side of it. I very much hope that the society to which he referred, the Wimbledon Building Society, will have made the grade, at least on the ground of size, by the time that its 1958 report appears.
If, however, we were to reduce the size qualification to £100,000, it would increase the number of societies eligible by size alone to no less than 480, although, of course, many would fail to pass the other tests. Such a reduction on this scale would open the field of trustee investment to a large number of comparatively small organisations with inadequate resources and status and it would inevitably increase the risk of the unsound society slipping through the net.
From the figures I have given, I hope that the Committee will agree that in proposing to fix the figure at £500,000 we have come down a good deal lower than recent public discussion would have suggested we would be able to come, whereas to go a good deal lower would be to bring in societies which do not qualify to appear on the list of trustee status stocks when one looks at the list as it stands at present.
6.45 p.m.
Several hon. Members have referred to the disadvantages to small societies because, if they were unable to claim trustee status, they might have difficulty in raising the necessary funds. That is an exaggerated and unnecessarily pessimistic view. The very fact that these societies are, as the hon. and learned Member for Cardigan suggested, so often small and intimate and helped along, rightly and properly, by local interests and by local personalities, should ensure their access to sources of funds which will not be unduly influenced by whether there is trustee status or not. They are also able to offer other advantages.
For those that do wish to go ahead, however, it is not just a matter of the larger swallowing up the smaller. There is probably scope for two or more small societies merging or amalgamating into a single society which, on the ground of size, might then qualify. I do not think that freedom to do that would be in any way regarded as a retrogressive movement and in appropriate cases it might well be the best thing to do.
In short, therefore, we feel that once the Bill has received the Royal Assent, we should proceed with the issue of the regulations substantially as drafted in Appendix II and retaining the proposed qualification of £500,000. One advantage, however—and this point I would like to make to my hon. Friend the Member for Halifax—of having the conditions prescribed by regulation instead of having them written into the Act is that these regulations can always be altered or amended at some time in the future without the necessity of fresh legislation. As they will be subject to annulment procedure, the House would not lose control over any subsequent changes.
My hon. Friend the Member for Wimbledon pointed the way when he reminded me of what I was going to mention, namely, that as the conditions will


be laid down by regulation, it will be possible to make amendments from time to time when we see how the Act works out. One of the conditions which could be amended if it became obviously right to do so would be the size qualification. For the time being, however, I hope the Committee will agree that we are right to stick to the figure of £500,000 total assets as an essential qualification, thereby striking the right balance between the size and status of existing trustee stocks and the proper and legitimate aims and ambitions of the smaller societies.

Mr. Mitchison: We have just had from the Economic Secretary what we should expect, a very Treasury speech. To listen to what he had to say, one would have thought that the main object of the Bill was to confer trustee status in some mysterious way on building societies. There is no proposal in the Bill to confer trustee status on building societies. If there were, I would not know what it meant. There is a limited proposal to confer trustee status on deposits in building societies, but that is not the same thing. The difference is material.
The main object of the Bill is nothing whatever to do with trustee status. Its object is to enable money to be made available for certain purposes of social importance. It may be that the small and intimate society has to be considered in relation to those purposes and to what extent it can serve them, and some quiet hobnobbing over the fire in Wales may result in a social advantage. It is that which has to be weighed as the major consideration.
In the light of that, I want to say a word or two, first, about what we have to decide tonight. We have before us three Amendments to which hon. Members have been referring. The first is a simple one, simply to reduce the figure of £500,000 in the agreed scheme to £100,000. The second is rather more complicated, because, while making the same reduction, it tightens up the provisions relating, I think, to liquidity. The third, the Liberal one, is a more general one, since, in effect, it leaves it to the Chief Registrar, and, I suppose, could be properly put in this way—that he would be entitled to disregard that particular consideration if he were satisfied as to the questions of reserves and liquidity.
The object of all these three Amendments has been to let in some smaller societies, and to do so while safeguarding the position of the depositors, who are the people concerned in this matter. We were given an imposing list of the bodies which issue securities which already have trustee status, and I could have added parish councils, but that, perhaps, would have been a rude interruption. They are small enough very often. Their total assets are rather difficult to estimate, but they are surely comparable with the building societies, if companies are to be compared with them. That does not seem to me to be the right way of looking at the matter at all.
What, in fact, has happened about trustee status is that all those building societies have bought irredeemable stock, and, owing to the financial policy of the Tory Government, there has been a very heavy depreciation in the irredeemable Government stock. If we take the Building Societies' Year Book and look at the difference between the value of that stock when it was bought, and its present market value, we shall find a very large gap indeed. Accordingly, the scheme carefully provides for the market value and not the book value to be taken into account. One does not think that the British Government will default, but one thinks, when talking about trustee status especially for building societies, that there are other aspects of the securities in which they invest than the mere fact that, in due course, if there is a promise to redeem, they will be redeemed, and, anyhow, if they are British Government securities, interest will be paid meanwhile.
There are other aspects of the matter, and the real point which we have to look at is this. First, will these societies contribute substantially to the real object of the Bill, which is to get money, and to use them as agents of the Government, in order to get certain improvements and repairs done to a number of houses, which repairs, so the Government say, would not be done otherwise? I do not think that the Bill will have a very large effect, and I have never thought so. The hon. Gentleman who has been talking about the Halifax Society—or, if he did not, we knew what he was thinking about—knows perfectly well that the Halifax Society has already made a very large


contribution in respect of this kind of house.
I do not think that what we are doing now will make very much difference to that. From the solemn language in which this has been discussed occasionally, one would have thought that this was a revolutionary project which would change the whole condition of houses, and the arrangements under which they are improved and maintained. It is nothing of the sort. It is a very minor Measure indeed, and, so far as its social consequences are concerned, all that we can do is to see that they are carried out as well and as thoroughly as possible within the scope of the Bill.
I therefore approach this question of trustee status of deposits by saying to myself that all these societies can be useful in this regard. Having said that, I ask myself whether there are any of them so "dicky" that nobody ought to be allowed to deposit money with them—not taking up their shares, but depositing money with them—on the basis of getting trustee security. I have been looking at the point, and I entirely agree that. when we look at the smaller societies, taking those within the range between £100,000 and £500,000 assets, they differ very considerably in regard to reserves and liquidity.
What we are considering are the deposits of these societies, and I look at the Failsworth Society, to which my hon. Friend referred. There are 12 depositors, not of very large amounts, and in this society, as in so many others, the hulk of the money is in shares, because the shares attract a higher rate of interest. This practice of putting in deposits on any large scale I do not say is confined to, but very largely results from, the investment of funds by companies and institutions which cannot take up shares in a building society under the present law.
I am not saying that there is anything wrong in that, but, looking at the reality of the matter, the societies which have the large deposits are, by and large, the larger societies. Therefore, when we are considering the 12 depositors in the Failsworth Society, it is fair to remember that they have a very much smaller stake, and if the society is smaller, so, too, is the amount of risk to be estimated.
I would have thought that the right way to look at this was not to be too strict in the matter. We can provide quite easily in these regulations for the withdrawal of this sanction. We could leave the matter rather more to the Chief Registrar than it is left at present, but I repeat that the main object must be to see that we get a society which can make a contribution to the real purpose of the Bill, and, on the other hand, that we do not lead depositors to put their money into something unsafe because it is to have trustee status.
I would have thought that it was quite easy to go well below the limit of £500,000 and meet the latter contingency, and that it was among the smaller societies that we are really most likely to find quite a lot of help for the major object of the Bill. My only difficulty about that is, in fact, that these smaller societies are doing this kind of thing already. It is, therefore, possible that, whatever we may do here will not add very much to what they are doing. They have done the hard work, and have not been given trustee status for their depositors as a reward. The laurel crown will be kept for some of the larger societies which may not have made so big a contribution. There is not very much justice in all this, and I am bound to say that I do not believe that any real risk would be run by the enlargement of the amount.
When we come to the question of which Amendment to accept, I would say at once that I think it is difficult for us here to lay down hard and fast terms. I would rather have had the Amendment of the hon. Member for Halifax (Mr. Maurice Macmillan), or that of the hon. and learned Member for Cardigan (Mr. Bowen) than the Bill at present. Either of them is on the right lines, but I think ours is a sensible proposal, and it has the advantage of being a very simple one. I do not believe that it would do any harm, and, personally, I think it is the best of the three. The worst of the four possibilities is the one in the Bill. It will keep out a large number of societies which could make a useful contribution to what ought to be the principal purpose of the Government.
The trouble about this is that it is not merely a question of the safety of deposits that has to be considered. It is the effect which it will have on the


reputations of these societies, and that is the real trouble. If a society gets a trustee status, undoubtedly it will advertise the fact. It is quite legitimate that it should, and building societies spend a great deal of money, comparatively, on advertising. They will score by getting trustee status for their deposits. Their deposits may be a quite small proportion of their assets. That will not matter. It will be their reputation which will help them.
7.0 p.m.
There will be a corresponding effect in the depreciation of the smaller societies which are and have been doing useful work and which might have been helped to extend it. I would have gone to the very limits of safety. There must be safety, of course, but I would have gone to the limits of safety in the interests of the main purpose of the Bill. That is why I thought that the Economic Secretary's speech was very much a Treasury speech; and that on a Bill which is not really a Treasury matter, although this part of it relates to the Treasury. The hon. Gentleman was putting forward about trustee status a rather bogus argument, if I may so say so without offence to him, from the financial point of view, but omitted the consideration of the smallness of the deposits in so many cases, and the real risk in trustee status, and neglected the main thing.
I want to raise one more question, and raise it at this point only quite shortly, in the hope that it may be considered by the Government. It has been put to me. If we look at the agreed scheme we shall find that we have to take the market value of the trustee securities. It is relevant to liquidity. I forget for a moment whether it is relevant to reserves or not, but it is certainly relevant to liquidity. When there is War Loan and the rest of it we can ascertain the marke

value quite easily, but many building societies lend to local authorities, and, of course, those loans very often have no market value at all. They are special loans and they are taken in at the actual amount lent. They appear in the balance sheet of the building society in this form: "Trustee securities—" so much; underneath, "Unquoted and interest." The unquoted, I think, represents those loans or loans of that character.

I wonder whether the hon. Gentleman would look at this question and would consider whether that is the right way of treating that security. I am not asking him to take the depreciated value of it. I am simply pointing out that there is this artificial element in it. Perhaps I would regard that as a slight argument for being a little more lenient in another respect, because, clearly, a building society which has to make investment in that form of trustee security will get a rather lower actual liquidity than a society which has the same amount invested in 31- per cent. War Loan and has considerable depreciation in it as a result of the Government's financial policy.

To sum up, I think that the Government ought to have given an undertaking that they would look at this Amendment again in the light of what has been said today in support of all three Amendments. They have failed to do so, and have stuck rigidly to the £500.000 limit, perhaps because it is part of an agreed scheme. In those circumstances, I would advise my right hon. and hon. Friends to protest against this rigidity and this misconception of the real purpose of the Bill by going into the Lobby in support of one of these Amendments, and that, under the rules of order, will have to be the first one.

Question put, That those words be there inserted:—

The Committee divided: Ayes 179, Noes 203.

Division No. 30.]
AYES
[7.5 p.m.


Ainsley, J. W.
Blackburn, F.
Broughton, Dr. A. D. D.


Allaun, Frank (Salford, E.)
Blyton, W. R.
Brown, Thomas (Ince)


Allen, Arthur (Bosworth)
Boardman, H.
Burke, W. A.


Allen, Scholefield (Crewe)
Bonham Carter, Mark
Burton, Miss F. E.


Awbery, S. S.
Bottomley, Rt. Hon. A. G.
Butler, Herbert (Hackney, C.)


Bacon, Miss Alice
Bowden, H. W, (Leicester, S.W.)
Butler, Mrs. Joyce (Wood Green)


Balfour, A.
Bowen, E. R. (Cardigan)
Castle, Mrs. B. A.


Bence, C. R. (Dunbartonshire, E.)
Bowles, F. G.
Champion, A. J.


Benson, Sir George
Boyd, T. C.
Chetwynd, G. R.


Beswick, Frank
Braddook, Mrs. Elizabeth
Cliffc, Michael


Bevan, Rt. Hon. A. (Ebbw Vale)
Brockway, A. F.
Clunie, J.




Collick, P. H. (Birkenhead)
Key, Rt. Hon. C. W.
Rankin, John


Craddock, George (Bradford, S.)
King, Dr. H. M.
Reynolds, G. W.


Crossman, R. H. S.
Lawson, G. M.
Rhodes, H.


Davies, Rt. Hon. Clement (Montgomery)
Lee, Frederick (Newton)
Roberts, Goronwy (Caernarvon)


Davies, Harold (Leek)
Lindgren, G. S.
Rogers, George (Kensington, N.)


Davies, Stephen (Merthyr)
Logan, D. C.
Royle, C.


Deer, G.
Mabon, Dr. J. Dickson
Shinwell, Rt. Hon. E.


Delargy, H. J.
McAlister, Mrs. Mary
Short, E. W.


Donnelly, D. L.
McCann, J.
Silverman, Julius (Aston)


Dugdale, Rt. Hn. John (W. Brmwch)
MacColl, J. E.
Silverman, Sydney (Nelson)


Ede, Rt. Hon. J. C.
MacDermot, Niall
Simmons, C. J. (Brierley Hill)


Edwards, Rt. Hon. John (Brighouse)
McGhee, H. G.
Skeffington, A. M.


Evans, Albert (Islington, S.W.)
Mclnnes, J.
Slater, Mrs. H. (Stoke, N.)


Evans, Edward (Lowestoft)
McKay, John (Wallsend)
Slater, J. (Sedgefield)


Fernyhough, E.
McLeavy, Frank
Smith, Ellis (Stoke, S.)


Finch, H. J.
MacMillan, M. K. (Western Isles)
Sorensen, R. W.


Fitch, Alan
MacPherson, Malcolm (Stirling)
Soskice, Rt. Hon. Sir Frank


Fletcher, Eric
Mahon, Simon
Sparks, J. A.


Foot, D. M.
Mainwaring, W. H.
Spriggs, Leslie


Forman, J. C.
Mann, Mrs. Jean
Steele, T.


Fraser, Thomas (Hamilton)
Mason, Roy
Stewart, Michael (Fulham)


George, Lady Megan Lloyd (Car'then)
Messer, Sir F.
Stones, W. (Consett)


Gibson, C. W.
Mitchison, G. R.
Summerskill, Rt. Hon. E.


Grenfell, Rt. Hon. D. R.
Monslow, W.
Sylvester, G. O.


Grey, C. F.
Moody, A. S,
Taylor, Bernard (Mansfield)


Griffiths, Rt. Hon. James (Llanelly)
Morris, Percy (Swansea, W.)
Thomas, George (Cardiff)


Griffiths, William (Exchange)
Morrison, Rt. Hn. Herber (Lewis'm, S.)
Thomson, George (Dundee, E.)


Hale, Leslie
Mort, D. L.
Thornton, E.


Hamilton, W. W.
Moyle, A.
Timmons, J.


Hannan, W.
Mulley, F. W.
Usborne, H. C.


Hastings, S.
O'Brien, Sir Thomas
Viant, S. P.


Hayman, F. H.
Oliver, C. H.
Warbey, W. N.


Healey, Denis
Oram, A. E.
Watkins, T. E.


Henderson, Rt. Hn. A. (Rwly Regis)
Oswald, T.
Weitzman, D.


Herbison, Miss M.
Padley, W. E.
Wells, Percy (Faversham)


Hobson, C. R. (Keighley)
Paling, Rt. Hon. W. (Dearne Valley)
Wells, William (Walsall, N.)


Holman, P.
Palmer, A. M. F.
Wilcock, Group Capt. C. A. B.


Houghton, Douglas
Pannell, Charles (Leeds, W.)
Wilkins, W. A.


Hughes, Cledwyn (Anglesey)
Parker, J.
Willey, Frederick


Hughes, Emrys (S. Ayrshire)
Parkin, B. T.
Williams, David (Neath)


Hughes, Hector (Aberdeen, N.)
Pearson, A.
Williams, Rt. Hon. T. (Don Valley)


Hunter, A. E.
Peart, T. F.
Williams, Richard (Openshaw)


Hynd, J. B. (Attercliffe)
Pentland, N.
Winterbottom, Richard


Irving, Sydney (Dartford)
Plummer, Sir Leslie
Woodburn, Rt. Hon. A.


Isaacs, Rt. Hon. G. A.
Popplewell, E.
Woof, R. E.


Jay, Rt. Hon. D. P. T,
Prentice, R. E.
Yates, V. (Ladywood)


Jeger, George (Goole)
Price, J. T. (Westhoughton)



Johnson, James (Rugby)
Probert, A. R.
TELLERS FOR THE AYES:


Jones, Jack (Rotherham)
Pursey, Cmdr. H.
Mr. Holmes and Mr. John Taylor.


Jones, J. Idwal (Wrexham)
Randall, H. E.





NOES


Aitken, W. T.
Bullus, Wing Commander E. E.
Freeth, Denzil


Allan, R. A. (Paddington, S.)
Burden, F. F. A.
Gammans, Lady


Amery, Julian (Preston, N.)
Butcher, Sir Herbert
Garner-Evans, E. H.


Anstruther-Gray, Major Sir William
Carr, Robert
Glover, D.


Arbuthnot, John
Cary, Sir Robert
Glyn, Col. Richard H.


Armstrong, C. W.
Channon, P.
Godber, J. B.


Ashton, H.
Chichester-Clark, R.
Goodhart, Philip


Atkins, H. E.
Clarke, Brig. Terence (Portsmth, W.)
Gower, H. R.


Baldock, Lt.-Cmdr. J. M.
Cole, Norman
Graham, Sir Fergus


Baldwin, Sir Archer
Cordeaux, Lt.-Col. J. K.
Green, A.


Balniel, Lord
Corfield, F. V.
Gresham Cooke, R.



Craddock, Beresford (Spelthorne)
Grimston, Hon. John (St, Albans)


Barber, Anthony
Crosthwaite-Eyre, Col. O. E.
Grosvenor, Lt.-Col. R. G.


Barlow, Sir John




Barter, John
Crowder, Sir John (Finchley)
Gurden, Harold


Batsford, Brian
Crowder, Petre (Ruislip—Northwood)
Hall, John (Wycombe)


Baxter, Sir Beverley
Cunningham, Knox
Harris, Reader (Heston)



Dance, J. C. G
Harrison, Col. J. H. (Eye)


Bell, Philip (Bolton, E.)
Davidson, Viscountess
Harvey, Sir Arthur Vere (Macclesf'd)


Bevins, J. R. (Toxteth)
Deedes, W. F.
Heald, Rt. Hon. Sir Lionel


Bidgood, J. C.
de Ferranti, Basil
Hicks-Beach, Maj. W. W.


Biggs-Davison, J. A.
Donaldson, Cmdr, C. E. McA.
Hill, Rt. Hon. Charles (Luton)


Bingham, R. M.
Doughty, C. J. A.
Hill, Mrs. E. (Wythenshawe)


Birch, Rt. Hon. Nigel
du Cann, E. D. L.
Hill, John (S. Norfolk)


Bishop, F. P.
Duncan, Sir James
Hobson, John(Warwick &amp; Leam'gt'n)


Black, Sir Cyril
Elliott,R.W.(Ne'castle upon Tyne.N.)





Holland-Martin, C. J.


Boyle, Sir Edward
Emmet, Hon. Mrs. Evelyn



Braine, B. R.
Errington, Sir Eric
Horobin, Sir Ian


Bromley-Davenport, Lt.-Col. W. H.
Erroll, F. J.
Horsbrugh, Rt. Hon. Dame Florence


Brooke, Rt. Hon. Henry
Fell, A.
Howard, Gerald (Cambridgeshire)


Brooman-White, R. C.
Finlay, Graeme
Howard, Hon. Greville (St. Ives)


Browne, J. Nixon (Cralgton)
Fisher, Nigel
Howard, John (Test)


Bryan, P.
Fraser, Hon. Hugh (Stone)
Hughes Hallett, Vice-Admiral J.







Hughes-Young, M. H. C.
Maitland, Hon. Patrick (Lanark)
Scott-Miller, Cmdr. R.


Hulbert, Sir Norman
Manningham-Buller, Rt. Hn. Sir R.
Sharpies, R. C.


Hurd, Sir Anthony
Markham, Major Sir Frank
Shepherd, William


Hutchison, Michael Clark(E'b'gn, S.)
Marlowe, A. A. H.
Smyth, Brig. Sir John (Norwood)


Hutchison, Sir Ian Clark (E'b'gh.W.)
Marshall, Douglas
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Hylton-Foster, Rt. Hon. Sir Harry
Mathew, R.
Steward, Sir William (Woolwich, W.)


Irvine, Bryant Godman (Rye)
Mawby, R. L.
Storey, S.


Jennings, J. C. (Burton)
Maydon, Lt.-Comdr. S. L. C.
Stuart, Rt. Hon. James (Moray)


Jennings, Sir Roland (Hallam)
Milligan, Rt. Hon. w. R.
Studholme, Sir Henry


Johnson, Dr, Donald (Carlisle)
Nairn, D. L. S.
Summers, Sir Spencer


Johnson, Eric (Blackley)
Neave, Airey
Sumner, W. D. M. (Orpington)


Jones, Rt. Hon. Aubrey (Hall Green)
Nicholls, Harmar
Taylor, Sir Charles (Eastbourne)


Kaberry, D.
Nicholson, Sir Godfrey (Farnham)
Taylor, William (Bradford, N.)


Keegan, D.
Noble, Michael (Argyll)
Teeling, W.


Kershaw, J. A.
Oakshott, H. D.
Temple, John M.


Kirk, P. M.
O'Neill, Hn. Phelim(Co. Antrim, N.)
Thomas, Leslie (Canterbury)


Lambton, viscount
Orr-Ewing, C. Ian (Hendon, N.)
Thomas, P. J. M. (Conway)


Lancaster, Col. C. G.
Page, R. G.
Thompson, R. (Croydon, S.)


Leavey, J. A.
Pannell, N. A. (Kirkdale)
Thornton-Kemsley, Sir Colin


Leburn, W. G.
Partridge, E.
Turton, Rt. Hon. R. H.


Legge-Bourke, Maj. E. A. H.
Peel, W. A.
Tweedsmuir, Lady


Legh, Hon. Peter (petersfield)
Peyton, J. W. W.
Vane, W. M. F.


Lindsay, Hon. James (Devon, N.)
Pickthorn, Sir Kenneth
Wakefield, Edward (Derbyshire, W.)


Lindsay, Martin (Solihull)
Pilkington, Capt. R. A.
Wakefield, Sir Wavell (St. M'lebone)


Linstead, Sir H. N.
Pitt, Miss E. M.
Walker-Smith, Rt. Hon. Derek


Lloyd, Maj. Sir Guy (Renfrew, E.)
Powell, J. Enoch
Ward, Rt. Hon. G. R. (Worcester)


Longden, Gilbert
Price, David (Eastleigh)
Ward, Dame Irene (Tynemouth)


Loveys, Walter H.
Price, Henry (Lewisham, W.)
Webbe, Sir H.


Lucas, Sir Jocelyn (Portsmouth, S.)
Ramsden, J. E.
Webster, David


Lucas-Tooth, Sir Hugh
Rawlinson, Peter
Williams, Paul (Sunderland, S.)


Mackeson, Brig. Sir Harry
Redmayne, M.
Wills, Sir Gerald (Bridgwater)


Maclean, Sir Fitzroy (Lancaster)
Remnant, Hon. P.
Wilson, Geoffrey (Truro)


McLean, Neil (Inverness)
Ridsdale, J. E.
Wolrige-Gordon, Patrick


Macmillan, Maurice (Halifax)
Robinson, Sir Roland (Blackpool, S.)
Wood, Hon. R.


Macpherson, Niall (Dumfries)
Robson Brown, Sir William
Woollam, John Victor


Maddan, Martin
Ropner, Col. Sir Leonard



Maitland, Cdr. J.F.W. (Horncastle)
Russell, R. S.
TELLERS FOR THE NOES:




Mr. Gibson-Watt and Mr. Whitelaw.

Mr. G. W. Reynolds: I beg to move, in page 1, line 10, after "reserves", to insert:
survey fees, other charges to members.
The Amendment refers to survey fees and other charges whereas the Bill refers only to "other matters" which together with requirements as to assets and liabilities, liquid funds and reserves will be looked at when the Chief Registrar decides whether or not to grant trustee status to a society.
7.15 p.m.
I was under the impression on Second Reading that the main job of the Bill was to assist in house purchase, but from what we have heard about the importance of trustee status I am now driven to the conclusion that the main purpose is to grant trustee status to building societies, with a slight concession by the societies in relation to 95 per cent. mortgages in exchange for that status.
I understand that most members of the Building Societies Association at present reckon to charge a survey fee on a scale suggested or recommended by the Association. I am told that on a house-purchase price of £2,000, or slightly above or below that figure, which the Bill has in mind, the recommended survey fee is £5. I have no objection to that. It seems a

reasonable fee. The building societies with which I have been in touch seem to comply with that recommendation, that is, building societies which are members of the Association. I have also been in touch with one reliable society which is not a member of the Association, but which, I understand, charges a similar survey fee.
I am not sure, however, that some of the smaller societies accept this recommendation. When a society advances on mortgage money lent to it by the Government, and the rate of interest is limited to ½ per cent. above the rate at which the money was borrowed, there may be some temptation to some societies, particularly those which are not members of the Association and which are not bound by a professional code of conduct, to think that there is an opportunity of securing a little more profit by adding a few pounds to the survey fee. It is for that reason that I should like to see the Chief Registrar have power, when approving a society, to say that the survey fees should be at a certain level, or, as far as this type of mortgage is concerned, that that condition should be written into the agreement between the society and the Government when money is advanced to it.
As to the other charges, I have particularly in mind the premium which some societies insist upon as a condition of granting a mortgage. The fact that this practice exists is recognised by the Government, because in the outline of the agreed scheme in the White Paper, "House Purchase", it is stated under paragraph (e) that:
No premium or any other charge shall be payable to a Society by a borrower as consideration for an advance on mortgage.
This is being insisted upon where a society uses Government money to provide a mortgage. It is in the outline scheme, but I notice that the scheme can be altered on three months' notice, after a review, at the request of the Minister or the Association or on six months' notice by the Government. I should prefer to see this condition more tightly tied up in the Bill or in regulations made under it rather than that it should appear only in this outline of the agreed scheme.
As to premiums, I would refer back to what was said a few minutes ago by the Minister and to the impressive list of investments covered by trustee status, including Government stock, local authority stock and certain public utility stock. The Minister said, in effect, "We have here a first-class security with a first-class name and the Government do not want to do anything that might lower the status or the standard of the trustee investment." To accept for trustee status a building society which follows this unscrupulous practice of insisting upon payment of a premium before it makes an advance will not exactly enhance the idea of trustee stocks in any way. The Minister was concerned about keeping up the reputation of trustee stocks, and I submit that we should not accept any building society which follows this practice.
I would refer hon. Members to an interesting article which appeared in the Observer of Sunday last, by Hilary Maugham, entitled "Mortgage Fallacy" in which the writer says of complaints against building societies:
There is another complaint. Some societies demand an entrance fee, though it is not always called by that name. In one case, the charge varies from 3 per cent. to 5 per cent. of the total borrowed—and that can amount to a tidy sum. Nor can you get it back if you pay off your mortgage. Let me add, in some haste, that all building societies do not

insist on this charge. The Halifax and the Abbey National, for instance, do not.
Some societies charge between 3 per cent. and 5 per cent. membership fee on the amount to be advanced, and they then offer to lend money to the applicants. No money is paid over. The building society does not need any investment money coming in to meet the investment charge. It does not lend money. All it does is to add £50 or more to the amount owed to it by the member to whom it is granting a mortgage. The society charges interest on money which the mortgagee has never received, and later, when the mortgage and interest is repaid,.it makes no attempt to refund his membership fee to him.
This is an exceedingly sharp practice and not one we would wish to be carried on by a building society recognised as suitable, for its deposits, to be given trustee status. If the Minister really believes in keeping up this level of private investment he should not allow any society recognised for trustee status to carry on such a practice. While the Government are recognising that there should be no premiums for the 95 per cent. mortgages under the new scheme, I suggest that as a condition of being recognised for trustee status they should insist that the societies drop this practice altogether. If it is bad for mortgage advances under the new scheme it is equally bad for any mortgage advanced, whether the money comes from the Government or from the normal sources of capital of the building societies.
As regards survey fees, in order to be on the safe side there is a great deal to be said for giving the Registrar power to insist on a maximum level of survey fee in the interests of safeguarding the borrower who goes to the building society.

Mr. Arthur Skeffington: I am glad to support my hon. Friend the Member for Islington, North (Mr. Reynolds) in what is a reasonable Amendment in the public interest. The question of survey fees was raised by myself and others during the Second Reading debate of the Bill. It would be an excellent safeguard to the borrower if in order to achieve trustee status building societies had to have a scale of survey fees approved by the Registrar


or, alternatively, if it were clearly specified in the agreement between the Ministry of Housing and Local Government and the societies. This should be a scale reasonable in all the circumstances.
I have one or two examples of quite small societies which charge far above the normal professional rate. In some cases they charge 10 guineas for a very perfunctory survey. As I mentioned on a previous occasion, all the society is concerned with is to assure that it will not put its money into an edifice that will not last as long as the period of the loan. Unfortunately, that is the only concern of the building society.
I made another point during the Second Reading debate which is worth remembering. Generally speaking, although the unfortunate borrower has to pay this fee, which may sometimes be excessive, he has no right to see the certificate. I should have hoped that that Ministry would, if not by legislative enactment, at least bring to the notice of the societies which want trustee status that it is fair that the borrower should see the survey report for which he is paying.
This matter was strongly commented on by Mr. Justice Devlin in a court case in 1949 where, although there had been a survey, a new house collapsed. He said that building societies might consider whether the great help which they give to people who want to own their own houses might not be extended by giving them the benefit of the expert advice for which the prospective owner is himself paying. Although the building societies promised to do this, nothing happened. I raise this point because I hope that building societies will take note. Many people feel indignant that they have to pay for a report which they do not see.
The other point mentioned by my hon. Friend, additional charges—by which he had particularly in mind premiums, I believe—is also important. It seems to me wrong to fleece the borrowers, because that is what it amounts to, of another £50 or £100 for membership of the society before they can get the loan, and then to make them pay interest on this cash premium in addition. This is most unfair. To put it no lower, it is an unethical practice. If these societies are

to be given a special status in the minds of the public for investment purposes, that practice ought not to be permitted, not only in connection with money advanced to them by the Government, but at all. It should not be part of their general practice anyway, because it cannot possibly be defended. Obviously this is only another pretext for getting extra cash out of the borrower for the society.
These things are not always done by the small societies. Some societies have a very good record in this matter, others have not. So long as these defects remain, it will be true to say, as I and others have said, that the building societies really have no interest in the borrower or the house, that they are not performing a social service, but are merely money lenders. It would be a good thing for their reputation if they were induced to give up these practices which have given them a bad name and are not in the public interest.

Mr. Erroll: The Amendment proposed by the hon. Gentleman the Member for Islington, North (Mr. Reynolds) really falls into two parts: first, the question of controlling survey fees, and secondly, of controlling what may be loosely classed together as "other charges", although as the hon. Member for Hayes and Harlington (Mr. Skeffington) pointed out, both he and his hon. Friend mainly have in mind premiums, whether overt or disguised.
As regards survey fees, the Registrar has no evidence to suggest that these are presently payable at exorbitant rates. They are usually payable to independent surveyors and are therefore on the normal scale, so that no unwarrantable profit accrues to societies. As regards other charges, particularly premiums, which might be charged to borrowers in relation to normal interest charges when mortgages are obtained, experience has shown that where a building society is under pressure from the Registrar not to make a charge in this form, the society has achieved a similar profit by imposing an excessive rate of interest for a short period. The net effect of what I have said is that it would be extremely difficult to frame regulations which would effectively deal with the practice mentioned by the two hon. Gentlemen.
There is another aspect of the matter to be taken into account, namely, that it


is mainly the smaller societies who seem to be indulging in these doubtful practices involving excessive survey charges. Probably those societies might be too small to qualify on grounds of size. I put that point in a rather interrogatory way in the hope that either the hon. Gentleman or his hon. Friend may be able to confirm that their anonymous examples relate to societies under the half million mark for total assets.

Mr. Skeffington: Not always.

Mr. Erroll: No, but mainly. Any regulations introduced, even if it were a straightforward matter to introduce them, would not catch the smaller societies but only those applying for trustee status. I think that it would be better to rely on the discretion of the Registrar when he is considering an application by a building society for approval, because he will have to take into account the conditions which we propose to impose and which are listed in Appendix 2 of the White Paper. Even if those are satisfied, he will still retain discretion, and that discretion can be usefully exercised in the case of any society which qualifies on all other grounds, but which nevertheless resorts to practices of the sort described.
7.30 p.m.
In the last resort, public opinion can do a good deal to stamp out practices of this sort. Now that there is plenty of competition among building societies, it should be possible for most people when faced with an exorbitant charge of this sort to say, "Thank you very much; I would rather go elsewhere". I hope that the Committee will accept my explanation and not press the Amendment to a Division, because I sincerely submit that it would not be practicable to try to frame regulations to control the items suggested.

Mr. Albert Evans: I found it difficult to follow the argument of the Economic Secretary. I should have thought that it would be easy for him to accept the Amendment. Other items are mentioned in the Clause—liabilities, liquid funds, reserves, and so on. This practice of charging excessive survey fees and added charges to members, such as entrance fees, could be dealt with in the same way.
There is no question but that some societies indulge in the practice of charging excessive survey fees. One correspondent has informed me—and I have only his statement for it—that some building societies are closely linked with firms of surveyors who work hand in glove with the societies, the amount of the survey fees being arranged between the firm of surveyors and the building society concerned.
Undoubtedly, some societies impose extra charges on borrowers. That is known to be so and the Government have admitted it. When the building societies use Government money, the Government insist that no premium or any other charge shall be payable to the society. If the Government are aware of this unsavoury practice, this exploitation of the borrower—and the Government admit their awareness because they safeguard the position when Government money is involved —why does the Economic Secretary refuse to deal with it now?
Why does he decline to insert one or two simple words so that it will be known that in future the societies are not to be allowed to pursue these devious methods of exploiting borrowers? I am sure that the Economic Secretary can easily accept the Amendment and that no difficulty will arise if he does so. Surely the regulations which are to be drawn for the guidance of the Registrar can be framed to cover this matter.

Mr. J. A. Sparks: The Economic Secretary said that in certain cases the Chief Registrar had made representations to certain building societies about the charging of premiums and that as a consequence the societies concerned had ceased to charge premiums but had sought recoupment in a different way. Are we to understand from that that the Chief Registrar has the power to do what the Amendment is proposing, namely, to make representations to the building socities on this matter of the charging of premiums?
If we knew what authority the Chief Registrar possessed for the control of this kind of abuse, that would be very helpful, because it may well be that the power is already there but more or less dormant and not sufficiently exercised. If the Registrar has this power, it is difficult to see how any society in receipt of State


money could seek to recoup itself by increasing its interest rate, since the interest rate would be fixed—unless the society were to disqualify itself from further receipts of State money. The power of the Chief Registrar is important in this connection. If we knew what his power was, it would help us to reach a conclusion.

Mr. Reynolds: I am surprised by one point which was made by the Economic Secretary, that apparently the Chief Registrar is aware of this practice having been operated by certain building societies and has somehow dropped a hint or put some pressure on them about it. We then had the admission that once the attention of the societies was drawn to the practice, they dropped it but apparently started a slightly different practice, possibly charging an extra ½ per cent. interest over the first two or three years of the mortgage, or something like that.
If this sort of thing is going on at the moment, will it continue when the societies have been granted trustee status? If the Government are unable to stop it now, will they make any attempt to stop it when certain building societies have been granted trustee status? Will those societies be able to play about with the Chief Registrar in this way, and as soon as he draws attention to one thing, find another way round and, presumably, as soon as he draws attention to that, find another way of getting money out of the unfortunate borrower? If this is the limit of the control which the Registrar has over the societies, we ought carefully to consider whether any of them should be granted trustee status.
I am amazed that this sort of thing can happen. I was not aware that the Registrar had drawn the attention of certain societies to this practice and presumably expressed his displeasure with it. If he cannot control them at the moment, can he not be given greater power to control them in future? If we are to give the societies trustee status, the registrar should be given more control over them than he seems to have at present.
I draw attention to one paragraph towards the end of the draft memorandum which has been agreed between the Government and the societies. It is the paragraph in which provision is made for houses erected between 1st January, 1919,

and 1st January, 1940. There is there what is virtually an obligation, which is undertaken by building societies recognised for the purposes of the scheme, which says that if the societies are to get Government money to assist them with houses built before 1919, they will, with their own money, try to do roughly the same sort of thing for houses built after 1919. I notice that it says that the term shall be at least as favourable as for the older houses.
How will the Government make sure that the building societies give terms at least as favourable in each case if at the moment they are able to get round any suggestions which the Registrar makes? How will the Government be able to ensure, once an agreement has been made, that the building societies will not evade their responsibility for those older houses? I suggest they can only see that the building societies keep their part of the bargain for houses built between 1919 and 1940 by having a regulation governing the charges they make for mortgages. Otherwise, if the experience of the Registrar in the past is any guide, I do not see how he or the Government can do anything about it in future.
This is a racket. It is all very well for the Minister to say that if the borrower does not like the terms of one building society he can go to another, but he forgets that the majority of people buy a house only once in a lifetime. They go to an estate agent for advice. They have never bought a house before and 90 per cent. of them have not the least idea of what they should do. Many of them do not want to buy a house, but that is the only way in which they can get somewhere to live. They are completely in the hands of the estate agent, who asks, "Have you a solicitor?" Probably they have never had any contact with solicitors and he suggests a solicitor's name to them. He then asks, "Where are you going to borrow the money?" Most estate agents seem to have agreements with building societies. I may be wrong, but I have always assumed that they suggest the society which gives them the best commission if they push its business. They naturally recommend that society to their clients.
If the client finds that he has to pay £50 or £100 premium, in the majority of cases he will accept that and meet the charge because he will not realise that it is an


exceptional charge, as he has never come across a building society before. Such people accept the recommendation of the estate agent and pay the charge. In the majority of cases they do not think of going to another society. We have seen in the past how little use has been made of the facilities of local authorities charging interest rates of 3 per cent. when building societies were charging 4½ per cent. I suppose the reason was that most people only buy a house once in their lives. The estate agent recommends them to the building society and they do not know any other way of going about the business. I cannot accept the argument that there is a free market and terrific competition. The majority of house purchasers accept the advice of the estate agent.
If the Minister can think of a better way of doing it than by regulations under Clause 1, I should be only too happy to accept his assurance. To say that it can, more or less, be left to the Registrar if he sees that a society is charging these premiums and that he will not have to accept them for trustee status although they qualify under other headings, does not go far enough. I first thought it would be all right, but when the Minister went further and spoke of the trouble that the Registrar had in dealing with the premium business I thought there should be something laid down with which the societies must comply.

7.45 p.m.

Mr. Lindgren: The Economic Secretary is always so courteous in dealing with the Committee that perhaps we should be courteous to him and give him the opportunity of saying the last word rather than take advantage of a further statement he is to make. Our point is that made by my hon. Friend the Member for Islington, North (Mr. Reynolds). It is our function, while the Bill is going through the House, to try to give added status to some building societies and to protect the borrower against any possibility of being put at a disadvantage.
As the Economic Secretary said, in the vast majority of cases many of the things which have been suggested do not happen. That is true so far as the large, medium or small society are concerned. It is true in all phases of life. By legislation we have to take action to protect the community against the worst, not to assume that the best will always obtain.

For instance, factory legislation is not passed to deal with the best employers, but with the worst. In 999 cases out of 1,000 the best employer is twenty years ahead of factory legislation. It is exactly the same with house purchase.
I emphasise to the Economic Secretary the human points made by my hon. Friend the Member for Islington, North. We are dealing now with a range of property and with people who are not buying houses every now and again. Some people change their houses almost as often as they change their shirts, but the majority of those covered by the Bill buy one house. If they pass it on to anyone, they pass it on to a son or daughter.
A practice which has not been referred to leads to some misunderstanding on the part of borrowers. As my hon. Friend said, often it is the only time a person has bought a house and they know nothing about this sort of thing. It is strange that they do not get more information, but they think that everyone in the business is as honest as they are. When they go to an estate agent and he asks whether they have a solicitor they say, "No, thank goodness. I have had nothing to do with the police or solicitors". The estate agent then says, "You do not want to have two solicitors. Why not have the solicitor associated with the building society? He will act for you both ways and it will not cost more". The purchaser accepts that, but if a person goes to an independent solicitor, in nine cases out of ten that solicitor will advise, "Have an independent survey of the property". The survey made by the building society is for its own purpose.
If the purchaser wants to be satisfied about what he is buying, and to be sure that dry rot will not appear in a short time so that he is saddled with heavy repairs before the mortgage is finished, he should have an independent survey. He should go to a qualified surveyor and have the property surveyed so that he may have a guarantee that what he is purchasing is good value for what he is paying. The building society's survey is not for the purpose of the purchaser, but is its security on the basis of the loan. The average person is required to pay a survey fee and if the survey is carried out for him it can be a guarantee that he is getting what he pays for.
The Economic Secretary ought to accept the Amendment, not because building societies are rooking people, but because a small proportion of them carry on practices which are not ideal. We are making it possible for many of them to get public money. They are to get additional money for other purposes and even those building societies which do not come in within the scheme may get added business.
Regulations of this kind would mean that if a building society were still carrying on practices which are not desirable it might start evading those regulations. When people start evading regulations and seeing how they can get round them that is proof to me, as a layman, that there is something fishy about the persons concerned. If they are all above board the regulations will not make any difference. They will try to comply with the regulations and that will be for the benefit of public protection.
I hope that the Economic Secretary will extend the courtesy he always shows to us by saying that he will include some of these words in the regulations and thereby protect people who are likely to buy houses.

Mr. Erroll: The debate which has arisen on this Amendment would have been almost more appropriate to a Bill revising building society law generally. I must remind the Committee that this Clause deals with the approving of certain building societies which presumably wish to be approved. Under Clause 1 (1), the Chief Registrar has to be satisfied that a building society
fulfils such requirements as to its assets and liabilities, liquid funds, reserves, and other matters …
The "other matters" enable the Registrar to exercise quite a wide discretion in his study of such societies as apply.
We are here concerned only with 200 or so societies which may regard themselves as eligible. Even if we were to insert the words proposed in the Amendment, that would not take in the small societies, the societies which do not wish to participate in the scheme and the societies which would be ineligible on account of size or for any other reason. If we accepted the Amendment it would

be a very imperfect way of trying to deal with the abuses alleged by earlier speakers, because it would not really deal with them at all, although it might spuriously give the impression that Parliament had taken the necessary steps to deal with them, and that would be a mistake.
The difficulty remains, I frankly accept, that there may be the odd society among the top 243 which might resort to the practices which have been mentioned. In that case the Registrar has very complete discretion and, of course, marching with the completeness of his discretion is the power to withhold approval, which constitutes a very powerful sanction.
I have mentioned a particular example which was taken up by the mover of the Amendment about one building society changing its practices under pressure. I mentioned that example to show that it becomes very difficult to deal with sharp practices by means of written regulations. I was not intending to develop the point of the Registrar and his activities but to show how difficult it is to deal with sharp practice by regulations. I think that in the case of societies which seek approval under this Bill we would do far better to rely on wide powers of discretion given to the Registrar than try to write everything into the Bill, as the hon. Gentleman the Member for Wellingborough (Mr. Lindgren) himself admitted when he started to refer to a practice which was not covered by the Amendment but which might have been. Our way of doing it means that all possible sharp practice can be swept into the purview which the Registrar will conduct before approving a society for the purposes of the Measure. I hope that is satisfactory, and I should like to remind the hon. Gentleman that I was told that I would not be further tackled on my statement.

Mr. Mitchison: I would ask the Economic Secretary one question. Would it not be advisable to put into the regulations some statement about these matters in order to indicate to building societies which might seek to qualify what they ought to do and to those who do not seek to qualify what good practice is?
Question put, That those words be there inserted:—

The Committee divided: Ayes 170, Noes 200.

Division No. 31.]
AYES
[7.55 p.m.


Ainsley, J. w.
Hannan, W.
Palmer, A. M. F


Allaun, Frank (Salford, E.)
Hastings, S.
Parker, J.


Allen, Arthur (Bosworth)
Hayman, F. H.
Parkin, B. T.


Allen, Scholefield (Crewe)
Healey, Denis
Pearson, A.


Awbery, S. S.
Herbison, Miss M.
Peart, T. F.


Bacon, Miss Alice
Hobson, C. R. (Ktighley)
Pentland, N.


Balfour, A.
Holman, P.
Plummer, Sir Leslie


Bence, C. R, (Dunbartonshire, E.)
Houghton, Douglas
Popplewell, E.


Benson, Sir George
Hughes, Cledwyn (Anglesey)
Prentice, R. E.


Beswick, Frank
Hughes, Emrys (S. Ayrshire)
Price, J. T. (Westhoughton)


Blackburn, F.
Hughes, Hector (Aberdeen, N.)
Probert, A. R.


Blyton, W. R.
Hunter, A. E.
Pursey, Cmdr. H.


Boardman, H.
Hynd, J. B. (Atteroliffe)
Randall, H. E.


Bottomley, Rt. Hon. A. G.
Irving, Sydney (Dartford)
Rankin, John


Bowden, H. W. (Leicester, S.W.)
Isaacs, Rt. Hon. G. A.
Reynolds, G. W.


Bowles, F. G.
Janner, B.
Rhodes, H.


Boyd, T. C.
Jay, Rt. Hon. D. P. T.
Roberts, Goronwy (Caernarvon)


Braddock, Mrs. Elizabeth
Jeger, George (Goole)
Rogers, George (Kensington, N.)


Brockway, A. F.
Johnson, James (Rugby)
Royle, C.


Broughton, Dr. A. D. D.
Jones, Jack (Rotherham)
Silverman, Julius (Aston)


Brown, Thomas (Ince)
Jones, J. Idwal (Wrexham)
Silverman, Sydney (Nelson)


Burke, W. A.
Key, Rt. Hon. C. W.
Skeffington, A. M.


Burton, Miss F. E.
King, Dr. H. M.
Slater, Mrs. H. (Stoke, N.)


Butler, Herbert (Hackney, C.)
Lawson, G. M.
Slater, J. (Sedgefield)


Castle, Mrs. B. A.
Lee, Frederick (Newton)
Smith, Ellis (Stoke, S.)


Champion, A. J,
Lee, Miss Jennie (Cannock)
Sorensen, R. W.


Chetwynd, G. R.
Lindgren, G. S.
Soskice, Rt, Hon. Sir Frank


Cliffe, Michael
Logan, D. G.
Sparks, J. A.


Clunie, J.
Mabon Dr. J. Dickson
Spriggs, Leslie


Collick, P. H. (Birkenhead)
MacColl, J. E.
Steele, T.


Corbet, Mrs. Freda
McCann, J.
Stewart, Michael (Fulham)


Craddock, George (Bradford, S.)
MacDermott, Niall
Stones, W. (Consett)


Grossman, R. H. S.
McGhee, H. G.
Sylvester, G.O.


Davies, Harold (Leek)
Mclnnes, J.
Taylor, Bernard (Mansfield)


Davies, Stephen (Merthyr)
McKay, John (Wallsend)
Taylor, John (West Lothian)


Deer, G.
McLeavy, Frank
Thomas, George (Cardiff)


Delargy, H. J.
MacMillan, M. K. (Western Isles)
Thomson, George (Dundee, E.)


Donnelly, D. L.
MacPherson, Malcolm (Stirling)
Thornton, E.


Dugdale, Rt. Hn. John (W. Brmwch)
Mahon, Simon
Timmons, J.


Ede, Rt. Hon. J. C.
Mainwaring, W. H.
Usborne, H. C.


Edwards, Rt. Hon. John (Brighouse)
Mann, Mrs. Jean
Viant, S. P.


Evans, Albert (lslington, S.W.)
Marquand, Rt. Hon. H. A.
Warbey, W. N.


Evans, Edward (Lowestoft)
Mason, Roy
Watkins, T. E.


Fernyhough, E.
Messer, Sir F.
Weitzman, D.


Finch, H. J.
Mitchison, G. R.
Wells, Percy (Faversham)


Fitch, Alan
Moody, A. S.
Wells, William (Walsall, N.)


Fletoher, Eric
Morris, Percy (Swansea, W.)
Wilcock, Group Capt. C. A. B.


Foot, D. M.
Morrison, Rt. Hn. Herbert(Lewis'm,S.)
Wilkins, W. A.


Fraser, Thomas (Hamilton)
Mort, D. L.
Willey, Frederick


George, Lady Megan Lloyd(Car'then)
Moyle, A.
Williams, David (Neath)


Gibson, C. W.
Mulley, F. W.
Williams, Rt. Hon. T. (Don Valley)


Grenfell, Rt. Hon. D. R.
Oliver, G. H.
Williams, Richard (Openshaw)


Grey, C. F.
Oram, A. E.
Winterbottom, Richard


Griffiths, Rt. Hon. James (Llanelly)
Oswald, T.
Woodburn, Rt. Hon. A.


Griffiths, William (Exchange)
Padley, W. E.
Woof, R. E.


Hale, Leslie
Paget, R. T.
Yates, V. (Ladywood)


Hamilton, W. W.
Paling, Rt. Hon. W. (Dearne Valley)
TELLERS FOR THE AYES:




Mr. Holmes and Mr. Simmons.




NOES


Agnew, Sir Peter
Bingham, R. M.
Cooper, A. E.


Aitken, W. T.
Birch, Rt. Hon. Nigel
Cordeaux. Lt.-Col. J. K.


Allan, R. A. (Paddington, s.)
Bishop, F. P.
Corfield, F. V.


Anstruther-Gray, Major Sir William
Black, Sir Cyril
Craddock, Beresford (Speithorne)


Arbuthnot, John
Bonham Carter, Mark
Crosthwaite-Eyre, Col. O. E.


Armstrong, c. W.
Bowen, E. R. (Cardigan)
Crowder, Sir John (Finchley)


Ashton, H.
Boyle, Sir Edward
Crowder, Petre (Ruislip—Northwood)


Atkins, H. E.
Braine, B. R.
Cunningham, Knox


Baldock, Lt.-Cmdr. J. M.
Bromley-Davenport, Lt.-Col. W. H.
Dance, J. C. G.


Baldwin, Sir Archer
Brooke, Rt. Hon. Henry
Davidson, Viscountess


Balniel, Lord
Brooman-White, R. C.
Deedes, W. F.


Barber, Anthony
Browne, J. Nixon (Craigton)
Donaldson, Cmdr. C. E. McA.


Barlow, Sir John
Bryan, P.
Doughty, C. J. A.


Barter, John
Bullus, Wing Commander E. E.
du Cann, E. D. L.


Batsford, Brian
Burden, F. F. A.
Duncan, Sir James


Baxter, Sir Beverley
Butcher, Sir Herbert
Elliott,R.W.(Ne'castle upon Tyne,N.)


Bell, Philip (Bolton, E.)
Carr, Robert
Emmet, Hon. Mrs. Evelyn


Bevins, J. R. (Toxteth)
Channon, P.
Errington, Sir Eric


Bidgood, J. C.
Clarke, Brig. Terence (Portsmth, W.)
Erroll, F. J.


Biggs-Davison, J. A.
Cole, Norman
Fell, A.







Finlay, Graeme
Lambton, Viscount
Redmayne, M.


Fisher, Nigel
Lancaster, Col. C. G.
Rees-Davies, W. R.


Fraser, Hon. Hugh (Stone)
Leavey, J. A.
Ridsdale, J. E.


Freeth, Denzil
Legge-Bourke, Maj. E. A. H.
Rippon, A. G. F.


Gammans, Lady
Legh, Hon. Peter (Petersfield)
Robinson, Sir Roland (Blackpool, S.)


Garner-Evans, E. H.
Lindsay, Hon. James (Devon, N.)
Robson Brown, Sir William


Glover, D.
Lindsay, Martin (Solihull)
Roper, Sir Harold


Glyn, Col. Richard H.
Linstead, Sir H. N.
Ropner, Col. Sir Leonard


Godber, J. B.
Lloyd, Maj. Sir Guy (Renfrew, E.)
Russell, R. S.


Goodhart, Philip
Loveys, Walter H.
Scott-Miller, Cmdr. R.


Gower, H. R.
Lucas, Sir Jocelyn (Portsmouth, S.)
Sharpies, R. C.


Graham, Sir Fergus
Lucas-Tooth, Sir Hugh
Shepherd, William


Green, A.
Mackeson, Brig. Sir Harry
Smyth, Brig. Sir John (Norwood)


Cresham Cooke, R.
Maclean, Sir Fitzroy (Lancaster)
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Grimston, Hon. John (St. Albans)
McLean, Neil (Inverness)
Steward, Sir William (Woolwich, W.)


Grosvenor, Lt.-Col. R. G.
Macmillan, Maurice (Halifax)
Storey, S.


Gurden, Harold
Maopherson, Niall (Dumfries)
Stuart, Rt. Hon. James (Moray)


Hall, John (Wycombe)
Maddan, Martin
Studholme, Sir Henry


Harris, Reader (Heston)
Maitland, Cdr. J. F. W. (Homcastle)
Summers, Sir Spencer


Harrison, Col. J. H. (Eye)
Maitland, Hon. Patrick (Lanark)
Sumner, W. D. M. (Orplngton)


Harvey, Sir Arthur Vere (Macclesf'd)
Manningham-Buller, Rt. Hn. Sir R.
Taylor, William (Bradford, N.)


Heald, Rt. Hon. Sir Lionel
Markham, Major Sir Frank
Teeling, W.


Hicks-Beach, Maj. W. W.
Marlowe, A. A. H.
Temple, John M.


Hill, Rt. Hon. Charles (Luton)
Marshall, Douglas
Thomas, Leslie (Canterbury)


Hill, Mrs. E. (Wythenshawe)
Mathew, R.
Thomas, P. J. M. (Conway)


Hill, John (S. Norfolk)
Mawby, R. L.
Thompson, R. (Croydon, S.)


Hobson, John(Warwick &amp; Leam'gt'n)
Maydon, Lt.-Comdr. S. L. C.
Thornton-Kemsley, Sir Colin


Holland-Martin, C. J.
Milligan, Rt. Hon. W. R.
Turton, Rt. Hon. R. H.


Horobin, Sir Ian
Mott-Radolyffe, Sir Charles
Tweedsmuir, Lady


Horsbrugh, Rt. Hon. Dame Florence
Nairn, D. L. S.
Vane, W. M. F.


Howard, Gerald (Cambridgeshire)
Neave, Airey
Vickers, Miss Joan


Howard, Hon. Greville (St. Ives)
Noble, Michael (Argyll)
Wakefield, Edward (Derbyshire, W.)


Howard, John (Test)
Oakshott, H. D.
Wakefield, Sir Wavell (St. M'lebone)


Hughes Hallett, Vice-Admiral J.
O'Neill, Hn. Phelim(Co. Antrim, N.)
Ward, Rt. Hon. G. R. (Worcester)


Hughes-Young, M. H. C.
Orr-Ewing, C. Ian (Hendon, N.)
Ward, Dame Irene (Tynemouth)


Hulbert, Sir Norman
Page, R. G.
Webbe, Sir H.


Hurd, Sir Anthony
Pannell, N. A. (Kirkdale)
Webster, David


Hutchison, Michael Clark(E'b'gh,S.)
Partridge, E.
Whitelaw, W. S. I.


Hutchison, Sir Ian Clark(E'b'gh,W.)
Peel, W. J.
Williams, Paul (Sunderland, S.)


Hylton-Foster, Rt. Hon. Sir Harry
Peyton, J. W. W.
Wills, Sir Gerald (Bridgwater)


Jennings, J. C. (Burton)
Pickthorn, Sir Kenneth
Wilson, Geoffrey (Truro)


Jennings, Sir Roland (Hallam)
Pilkington, Capt. R. A.
Wolrige-Cordon, Patrick


Johnson, Dr. Donald (Carlisle)
Pitt, Miss E. M.
Wood, Hon. R.


Johnson, Eric (Blackley)
Powell, J. Enoch
Woollam, John Victor


Kaberry, D.
Price, David (Eastleigh)



Keegan, D.
Price, Henry (Lewisham, W.)
TELLERS FOR THE NOES:


Kershaw, J. A
Ramsden, J. E.
Mr. Gibson-Watt and


Kirk, P. M.
Rawlinson, Peter
Mr. Chichester-Clark.

Sir H. Butcher: I beg to move in page 2, line to leave out "approve" and to insert "designate".

The Temporary Chairman (Mr. H. Hynd): It would be convenient for the Committee if the hon. Member dealt at the same time with his two Amendments in line 3, the first to leave out "approved" and to insert "designated" and the second to leave out "approval" and to insert "designation".

Mr. Mitchison: On a point of order. Are there not also two Amendments in lines 14 and 15 in the name of the hon. Member for Holland with Boston (Sir H. Butcher) which bear on this matter?

Sir H. Butcher: They are all consequential.

The Temporary Chairman: We can deal only with the Amendment which the hon. Member has moved and the two Amendments in line 3, because the hon.

Member's Amendments in lines 14 and 15 are not selected.

Sir H. Butcher: Thank you, Mr. Hynd, for being so helpful.
As the proceedings of the Committee have shown so far, certain of the smaller societies, through no fault of their own except size, will not qualify for this trustee status of deposits in their funds. The converse of the word "approved" is the word "non-approved", which probably has a derogatory implication. On the other hand, the opposite of the word "designated" is the word "non-designated", both terms being completely neutral. I believe that this change will commend itself to the Committee and to the Minister.

Mr. Mitchison: If a building society prefers to be mistaken for a new town rather than for an approved school, we on this side of the Committee have no objection.

Mr. Erroll: I am glad to have an assurance from the Opposition that they have no objection to the Amendment, which we are glad to support. We hope that the Committee will accept it.

Amendment agreed to.

Further Amendments made: In page 2, line 3, leave out "approved" and insert "designated".

In page 2, line 3, leave out "approval" and insert "designation".—[Sir H. Butcher.]

Mr. Erroll: I beg to move, in page 2, line 12—

The Temporary Chairman: The hon. Member has forgotten the Amendment in line 4.

Mr. Erroll: I beg to move, in page 2, line 4, to leave out "withdrawn" and to insert "revoked".

Mr. Mitchison: The reason for this Amendment is that the Bill refers to withdrawing "approval", but we could not very well withdraw "designation". The word "revoked" is more suitable.

Mr. Erroll: I am grateful to the hon. and learned Member. I had it in mind that this Amendment was consequential and I was, therefore, taken by surprise when asked to move it.

Amendment agreed to.

Mr. Erroll: I beg to move, in page 2, line 12, at the end to insert:
(2) Where the officer appointed to perform in Northern Ireland the functions of registrar of friendly societies (in this section referred to as the Registrar for Northern Ireland) is satisfied that a society incorporated under the Building Societies Acts (Northern Ireland), 1874 to 1940, which is a permanent society within the meaning of those Acts fulfils the requirements prescribed under subsection (1) of this section, he may designate the society for the purposes of paragraph (a) of that subsection; and where a society has been so designated and the designation has not been revoked, that paragraph shall apply in relation to it as it applies in relation to a permanent building society within the meaning of this Act.

The Temporary Chairman: The Committee could discuss at the same time the Amendment in page 2, line 18, after "Registrar", to insert:
or the Registrar for Northern Ireland.

Mr. Erroll: The Registrar for Northern Ireland would be given power by this

Amendment to approve permanent building societies incorporated in Northern Ireland in the same way as the Chief Registrar is already empowered under Clause 1 (1) of the Bill to approve societies incorporated in Great Britain. The effect of the Amendment is that deposits with approved societies incorporated in Northern Ireland will he made lawful for trustees in Great Britain subject to the same conditions as those which apply to deposits in approved societies incorporated in Great Britain. The Amendment has been agreed with the Government of Northern Ireland.
Building societies incorporated in Great Britain have power to raise funds in Northern Ireland, just as societies incorporated in Northern Ireland may raise funds in Great Britain. It would be inequitable, therefore, not to give to Northern Ireland societies the opportunity to secure trustee status for their deposits on the same terms as will apply to societies incorporated in Great Britain. The regulations made by the Treasury under Clause I (I) will, accordingly, be applied in Northern Ireland by the Registrar. This is a small change. I hope that the Committee will agree that it improves the Bill and its operation and will accept the Amendment.

Mr. Mitchison: May I ask the hon Gentleman two questions? First of all, is there a building society in Northern Ireland with assets of over £500,000? If so—and I assume there is—how many such societies are there? Secondly, do they conform with the recommendations of the Building Societies Association in regard to rates of interest charged? That is all I wish to ask, but the hon. Gentleman will see that these questions have a certain value and interest, and I hope that he will be able to give me an answer.

Mr. Erroll: The position at the moment is that no society incorporated in Northern Ireland is likely to qualify, but there is some prospect of a merger which should make one society eligible for consideration. Consequently, the Northern Ireland Government would like to have the same arrangements apply, and to see the application of the Treasury regulations by the Registrar for Northern Ireland who is to be employed to help in this matter.

Mr. Mitchison: In those circumstances, I can only hope that some contribution will be made by this Bill to the provision of a standard amount and other improvements in house purchase in Northern Ireland. The hon. Gentleman did not answer the second part of my question. I would not wish to press him for it now, but I think that he will see that in the terms of the Bill it is advisable that there should be some correspondence between rates of interest in the two countries.

Mr. Erroll: I can explain that point. It is, of course, for the Government of Northern Ireland to decide whether to make a grant, and, if so, to legislate in the Northern Ireland Parliament. It is, therefore, a matter for the Northern Ireland Parliament to decide for itself.

Mr. Mitchison: Are we then to understand that the passage of this Bill is not enough and that the Northern Ireland Parliament will have to pass another Bill there?

Mr. Erroll: Yes, if it so decides.

Mr. Mitchison: The whole thing cannot be put in one Bill?

Amendment agreed to.

Mr. Erroll: I beg to move, in page 2, line 13, to leave out from "Registrar" to "this" in line 15 and to insert:
or, as the case may be, the Registrar for Northern Ireland, shall publish in the London, Edinburgh and Belfast Gazettes, a notice of every designation made by him under".
This is a consequential Amendment, which provides that the giving of approval to, or the withdrawal of approval from, a building society shall be published in all three countries.

Amendment agreed to.

Further Amendments made: In page 2, line 15, leave out
withdrawal of such an approval
and insert:
revocation of such a designation.

In line 18, after "Registrar", insert:
or the Registrar for Northern Ireland."—[Mr. Erroll.]

Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.

8.15 p.m.

Mr. Thomas Steele: We have so far had some very nice, comfortable discussions, and very

little has been said to upset the general atmosphere of good will. What I am about to say may strike a somewhat different note.
Clause 1, as it now stands, will enable certain building societies to furnish funds—particularly with Government money—to people who wish to buy houses built prior to 1919. That is its main function. I am sure, however, that it is appreciated that building societies are not, as it were, just an abstract body of people. They consist, first of all, of directors, but even the directors do not always do the actual work. There are the various regional organisations, and eventually it comes down to the individual representative of a building society in a particular town.
I am reinforced in what I want to say by something that the Minister of Housing and Local Government said about an Amendment tabled by my hon. Friend the Member for Coventry, South (Miss Burton) dealing with the interpretation that local agents and officers of local branches of building societies may put on directions given to them by their boards of directors. I took note of his words. He said that some local representatives applied rules of their own. Therefore, it seems very important, when we are giving this approval to the buildings societies, to look at some of the things that some agents have been doing.
In the very first sentence of the right hon. Gentleman's Second Reading speech on the Bill on 15th December, 1958, he said:
Provided people can afford to buy a house and look after it, home ownership is a splendid thing in every way."—[OFFICIAL REPORT, 15th December, 1958; Vol. 597, c. 787.]
I agree with that, provided that people can afford to buy a house. But when we look at Appendix 1 of the White Paper we see that a society can
…grant to any borrower who in the opinion of the Society is creditworthy …
The word "creditworthy" has been used throughout the discussions.
During the Second Reading debate I said that I was not at all happy about what was at present happening over house purchase in my constituency and other parts of Scotland, and that I wanted to ensure that, whatever was done about this we would not give approval to building societies to carry on the kind of racket to which I then referred. Since I made that


speech, I have had a great deal of correspondence which has proved that what I said then was correct. I want now to quote from one or two letters to give the Committee an idea of what it is all about.
I drew attention to the activities of a man in my constituency, Mr. Lascelles McClughan, who is a house agent and the local agent for the Halifax Building Society. I have a letter here which reads:
I have read with interest in the newspaper the account of your speech against Lascelles McClughan, as I happen to occupy one of his houses. At the time I entered the above address it was as a sub-let. After I had been here for over two months, the occupant left to go to England. Then I received notice from McClughan to leave or buy the house. I had to pay £25 deposit and the price of the house is £500 for a room and kitchen. At that time I was after coming to the city from the North and was pretty green as far as this was concerned. Since then I see I have been grossly overcharged for a property not worth half the price. Also I pay repair bills every year for which I cannot what for".
The Committee will, I know, excuse the grammar. I could go on and read more of this letter, but what I have read is an indication of the kind of things which happen in connection with some of the houses affected by the Measure we are now discussing.
I have another letter which says:
I read your allegations about Mr. Lascelles McClughan with great interest as it recalled to me that I was one of his victims about eleven years ago. At that time I purchased a house in the south side of Glasgow for £800. I paid £100 deposit and signed a legal document. But when I went to see the house it was occupied by a tenant who had no intention of leaving.
It was only after some considerable trouble that this man was able to get his deposit back.
I have another letter which ties up with what the Secretary of State for Scotland said, that what is here proposed did not relate only to houses worth £1,800 but to houses of lesser value. This letter reads:
I am writing this no0te to you and would he obliged if you would send it to Mr. Steele"—
it was sent to me from a local newspaper—
It is about Lascelles McClughan and after reading today's Record I think Mr. Steele is quite right as I was one of the victims. I have seven of a family. My husband bought a house of him for £350, £30 down and so much per month. We put in a fireplace and did up the walls, put in electricity, also a new sink unit, and unfortunately were

£7 back in our payments after paying up nearly £200. They were never away from the door looking for money and threatening to put us out. He would send you a summons for a small court debt every other week and he would collect the court expenses and we were never at court.
That is another indication of how this man operates.
Here is another letter which, I think, shows something even worse:
Regarding Mr. McClughan I never met anyone like him in my life. His performance is dreadful and believe you me since we have been here I have seen a great deal of him. We have had to pay a lawyer since 1955 as he sent me an account for what he calls common charges. This was a half yearly account and amounted to £9 18s. I paid it in three parts sending a money order for £3 each week until the third week. When I asked for a receipt he wrote back to me telling me that he had not received any of the money and I had to vacate the house immediately. I went into his office and met a Mr. Diamond who was just as rude as him and they swore they had never received any of the money. I then went to a solicitor and I am paying all my instalments through him ever since. I went to the G.P.O. and they were able to give me full proof that I had paid the £9 18s. and the bank Mr. McClughan had paid the orders into. He immediately said that it was a clerical error. Then he started saying that I owed him an enormous sum for back payments of common charges. As he never gave me any receipts I again appealed to the G.P.O. but they could not help me this time and I unfortunately had to pay this money over again. Even although I have a lawyer it is hard going as although they know I have engaged them to watch him they don't seem to be up to all his tricks. We had Irish people in the flat upstairs and he literally threw them out and then sold their stuff.
This, I think, is even worse. The lady goes on to say that:
He has several young men he sends out daily to snoop, cajole and very often threaten his victims, and believe you me having had a few visits from these characters I can readily understand it.
I have a letter here also from a group of people who say how glad they are that this racket has been exposed. I said that this man was interested not in selling houses to creditworthy people at all but was interested in selling houses to people who could not afford to buy them. The letter from these people goes on to say:
There have been four houses sold over and over again thus gaining deposits every time.
There is another aspect to this also. I have a letter here from a very respectable firm in Glasgow which says:
We are delighted you have attacked the racket in house sales. We ourselves are a hire-purchase company and this is what we


find. Houses are sold for a deposit. The tenant obtains our hire purchase facilities re installation of a fireplace. Very soon after the tenant goes in, he cannot keep up with the house instalments. He is thrown out and before we know where we are the factor has sold the house for a much bigger figure—thanks to our fireplace—but refuses to reimburse us in any way for the fireplace we have installed. We have one particular case where a party took a six room and kitchen house, put in two new fireplaces, but as far as we know never occupied the house and the factor refused to allow us one penny for the fireplaces but proceeded to capitalise by selling the same property for a larger price.
We can without fear of contradiction confirm that it is to the poorest of the poor these houses are sold. We would like to point out that there are at least ten to twelve factors in this racket, perhaps more.
I should like an assurance that some guarantee will be given that there will not be a further extension of this kind of racket.
As I said on Second Reading, it was reported in the Press that the Halifax Building Society would be making a private investigation into this matter. I do not say that this man is operating on behalf of the Halifax Building Society. I do not know. I would hazard a guess that he is not, but the point is that this man is an agent of the Halifax Building Society and the kind of men he employs are those who go out to cajole and threaten people regarding payments. This is the kind of person who will be operating this scheme in my constituency.
8.30 p.m.
I hope that when the Minister replies he will be able to give me some indication whether a guarantee will be given. Will there be an investigation? Once approval has been given to a society, what kind of report will be made? Will a copy of the application which is made by the building society be submitted to the Treasury so that it will have some idea of the kind of people and the resources of the applicant?
All the argument so far on the Clause has concerned creditworthy people. The first Amendment to the Clause dealt with the idea that sex discrimination was being used in people not getting credit from building societies. I am concerned with an entirely different matter, because clearly the kind of racket which is going on is for the purpose of making money out of the poorest of the poor. Those of us who know housing conditions in

Glasgow and the west of Scotland know that this kind of racket must be stopped. I hope and trust that the Minister will be able to assure us that as Government money is concerned no building society or building society agent will be able to extend the kind of racket which I have mentioned.

The Joint Under-Secretary of State for Scotland (Mr. J. Nixon Browne): My right hon. Friend is not aware of any evidence to indicate that either Mr. McClughan or the other gentleman to whom the hon. Member for Dunbartonshire, West (Mr. Steele) referred is operating outwith the law. So, to that extent, it is difficult to see what action is open to my right hon. Friend. If anyone has evidence to show that McClughan or anyone else is breaking the law, he should, of course, report the facts to the Procurator Fiscal.
I sympathise most deeply with the people who wrote to the hon. Gentleman and with the people who have had similar experiences but have not written about them. This just goes to show that people would be so well advised before signing an agreement—it is too late afterwards— to consult a solicitor or to go to a citizen's advice bureau about the form of agreement they are signing, and they should make inquiries of local authority offices about the conditions of the house.
To some extent, the Bill, which makes 95 per cent. loans available over a very wide range of cheaper properties, should enable many wage earners to purchase sound property on reasonable terms and conditions, and this should help to lessen the attraction of the type of offer which is made by Mr. McClughan and others. The conduct of an agent of a building society is a matter for the building society itself. After all, this is a very competitive industry. It is in the direct interest of the society not to be discredited by an agent. There seems to me to be very little that my right hon. Friend can do to put a stop to such abuses, which must be minimal over the wide range of building society operations. I can only hope that the hon. Member's second speech on this subject will have drawn attention once more to the building society, whatever it may now be, for whom the gentlemen concerned purport to act as agents.

Mr. MacColl: As the Joint Under-Secretary of State has said, this is a very competitive industry. I would not draw from that exactly the same conclusions as the hon. Gentleman has done. He said that in many cases it means that building societies want to be particularly jealous of their reputation, because if they get a reputation among people of discrimination, that they are careless or unscrupulous in their pursuit of business, it will react badly on them. On the other hand, it is equally true that, if pressure of competition is very great, particularly, as it were, on the periphery, in cases where, as my hon. Friend the Member for Dunbartonshire, West (Mr. Steele) has said, agents are competing for business, the danger is surely that building societies will tend to make grants for the purchase of property which is not a good investment.
I have with me the bulletin of the Building Societies Association for November last year, which discusses the Bill and the Clause and states:
A building society would very rarely take the risk of granting a 95 per cent, mortgage on property built prior to 1919, so some method is needed to cover the additional risk involved.
The Government and local authorities are stepping in to help to underwrite that risk. It remains true that, looking at this as a business proposition, in many cases the granting of these high mortgages on old property is a risk which a prudent society would not take. That increases the danger that in a market where there is great competition, the societies will not be discriminating in the allocation of their money, but that they, and particularly their agents, will feel impelled to enter into arrangements when really the facts of the situation—the kind of facts, for example, which my hon. Friend has mentioned and the kind of warning that the Joint Under-Secretary has given—indicate that people should not enter into the ownership of property.
The House has had to consider this question already in another context, because the provisions of the Second Schedule to the Housing Act, 1957, would not have been needed in their original form under the Slum Clearance Compensation Act, 1956, had it not been that when local authorities began extensive slum clearance operations, it was dis-

covered that large numbers of owner-occupiers had bought property which was slum property and which had to be condemned as unfit to live in. Because of the size and extent of that problem, the Government felt it necessary to introduce special legislation to provide for higher compensation for this property than a strict interpretation of the law would have allowed. If that was necessary, surely it indicates the need to watch the operation of the Clause with considerable care. There is a danger that people will enter into the hazard of owner-occupation in cases where it is not desirable to do so.
I listened with great interest to the speech of my hon. Friend the Member for Dunbartonshire, West. One sometimes talks about these things in rather theoretical terms, and I was interested that when my hon. Friend had mentioned this kind of problem in his constituency he immediately attracted letters from widely scattered types of cases. That seems to me to indicate that there is a very serious problem which needs very careful watching. After all, included in paragraph 5 of the Second Schedule to the Housing Act, 1957, were special provisions whereby an owner-occupier whose property had been taken for any part of a clearance project, could get out of his personal covenant in the mortgage into which he had entered.
If loans for house purchase had been negotiated with experienced and highly reputable people, with due regard to the security of their money, that situation would never have arisen. We should never have people in that position, and there is no hon. Member of this Committee who has not had this problem arising in his own constituency, where somebody has said "My house is to be demolished; I do not mind that, because it is an unfit place, and I would much rather have a council house, but now I find that I have heavy payments to make to a building society, or whoever was the mortgagee, on account of the house from which I can no longer have any benefit." It was because of the widespread appreciation of that problem that this particular paragraph was inserted into the Schedule, providing for application to be made to the county court for relief from this obligation.
Therefore, we have evidence in this Committee that this is a serious problem, and I think it would be unwise for the


Committee to pass this Clause, giving the impression that all will be very easy, that no problem will be involved and that it will all work smoothly. The difficulties involved in this undertaking are very great indeed, and I am very grateful to my hon. Friend for having given us, in so dramatic a way and with so much factual evidence, proof that this is a very real problem, which needs to be watched very carefully indeed.

Mr. J. A. Sparks: There are one or two things which ought to be said before the Minister is allowed to have Clause 1, which is the most important of the Clauses in the Bill. It would seem to me that the Government are to some extent giving a false impression of the effect of Clause 1 and the main purpose of the Bill.
As I understand the Clause and what is involved with it, it provides approval for certain building societies for the purpose of receiving public moneys to advance on the acquisition by applicants of dwellings that were completed before 1919. The minimum age of the dwelling or house is 40 years, but it may be 50, 80, or even 100 years, because there is no limit in that respect. As my hon. Friend the Member for Widnes (Mr. MacColl) has pointed out, there are many houses and dwellings which are near to slum clearance areas which are not at the moment technically slums but which are not very far from being included in that category. It is proposed to permit the approved building societies to advance loans to applicants to acquire such properties, and I understand that a maximum figure that will be advanced is £2,500, though I believe that the right hon. Gentleman is proposing later on in the Bill to raise that in certain areas to £3,000.
8.45 p.m.
First, I do not believe that there are many people living in pre-1919 completed houses who can afford to apply for mortgages of that extent. I do not believe that they would have an income sufficient to be able to acquire such property; indeed, many of them would not desire to do so. However, there is this important factor. If such a person does apply and receives a loan, as I understand it, the loan is repayable over 20 years. Also, if that house has need of improvement,

further loans can be made by the building society towards the cost of such improvement. There is, however, an important condition, and I want to know from the Minister whether it applies not only to improvement grants but to the advancing of the loan itself. The condition for an improvement grant is that there must be a minimum of 15 years' life in the house, but if the applicant is going to secure a loan repayable over 20 years for a house which will last only 15 he is going to be left at the end of the period with an asset which is worth very little. Therefore, I do not believe that building societies, especially those which are jealous of their financial standing, will want to burden themselves very much with this kind of property which is a diminishing quantity measured as security value. I do not believe this will lead to the success the hon. Gentleman seems to envisage. It is quite true that local authorities also cover this process. Why the right hon. Gentleman should seek to duplicate that I do not know. I do not think there is a case for duplication.
There is also another important factor. We have heard quite a lot said about the trustee status which is to be given to certain approved building societies. I do not think that is worth very much, but it is laid down that the public money which will be invested in a building society shall be a first charge, or nearly a first charge, on the assets of the building society. Should a building society overload itself with assets which are declining very sharply, should any of them find themselves in difficulties, it will be the ordinary shareholders who will suffer and not the depositors and not the Exchequer, because, as I understand it, the depositor and the State will have the first claim in the event of a society having for any reason to be wound up or finding itself it difficulties through overloading itself too much with this type of property which is a shrinking asset.
Therefore, I should like the right hon. Gentleman to give some assurance in a case of that kind that it is not the ordinary shareholders in the building society who will have to suffer the risks which may—and we all hope that they will not—descend upon building societies in years to come. The Government are taking a clear course to look after their own interests and are not prepared to take the


same risks as the ordinary shareholder in a building society is having to take. The Clause, therefore, is not quite the glaring success that the right hon. Gentleman is seeking to claim for it. I believe that this is a little bit of pre-election window dressing, and it is as well that we should realise the main purpose of the Bill.
I do not think that it will contribute more than a very little to the solution of the problem of the old houses. In so far as it may make a small contribution here and there it is to be welcomed. But by and large, it will never achieve all that is being claimed for it by the right hon. Gentleman, and I do not think that the House should put a great or excessive value on the merits of this Clause.

Mr. Maurice Macmillan: I hope that the Committee will forgive me if I refer briefly to a matter which was raised by the hon. Member for Dunbartonshire, West (Mr. Steele), since the society involved has its headquarters in my constituency. I have been in touch with the society. The inquiries which it is making are still proceeding and therefore there is not a great deal that I can say, except to give one or two facts.
The Halifax Building Society has about twenty-four properties in the area to which reference has been made, and the last arrangement which it entered into there was about two years ago. Any property of which the mortgage is held by the Halifax Building Society in that area cannot be dealt with in the way that was described, since the agent has no control over the resumption or resale of property once the mortgage has been passed by the Halifax.
Therefore, as far as the Halifax Building Society is concerned, the kind of thing to which reference has been made could not happen in connection with money loaned to it by the Government even if the Halifax did in fact qualify for a loan under this Bill. In any case, operations which have been taking place in the last two years have taken place in a period in which the Society had no transactions in that area. Investigation has not been completed, but as far as I know the properties concerned have been dealt with by the man who has been mentioned as an ordinary owner on his private account, possibly in partnership with somebody

else, but not, of course, with the Halifax Building Society.

Mr. Reynolds: I should like to make one or two points before we conclude discussion on the Clause, particularly with reference to the so-called arrangements to assist people to obtain 95 per cent. mortgages. The cat was let out of the bag several times today, more particularly from the other side of the Committee, to the effect that the main purpose of the Clause is to secure trustee status to certain societies. Indeed, the main purpose of the Bill is to do that.
We on this side of the Committee must draw attention to the fact that only a limited amount of money is available in this field of trustee investments and now it appears that over two-thirds of the societies are to be eligible for trustee status. I happen to be chairman of the finance committee of a local authority represented so ably here by my hon. Friend the Member for Acton (Mr. Sparks), and having heard only today that we are likely to have the biggest rate increase for some years as a result of the passing last year of the Local Government Act, I now look askance at the fact that once this Clause is approved, and once this Bill becomes law, it will be much more difficult for the finance committee of my local authority to borrow on the market from the sources from which it has been obtaining money for the last three or four years. We shall be competing not only with the people who have been there for some years now but also with the building societies, with the trustee savings banks, with pension funds and other similar organisations.
I would not like to let this Clause go by without protesting at the fact that this will make it more difficult for local authorities to borrow money for capital works than it has been even in the last few years.

Mr. Mitchison: We all want to get on with the Bill and so I will say briefly what I have to say. The point just raised by my hon. Friend the Member for Islington, North (Mr. Reynolds) is a real one and it goes even beyond the borrowings of local authorities. Looking at the discussion we have had on this Clause, and the terms of the Clause itself, it seems to me that the main difference between


the two sides of the Committee is as follows. The Government and their supporters are content to allow the building societies to attain trustee status purely on financial considerations and they do not take into account for the purposes of this Clause the other side of the picture, that the price to be paid or the function to be discharged in return for trustee status is to act in effect as the agents of the Government in respect of certain advances.
We take the view that this latter function is the main purpose of the Bill and that it cannot be disregarded when the question arises of approval under this Clause. We believe, in short, that it is not enough for the Government to say, "You are financially solvent"—whatever the terms may be— "and therefore you can have trustee status for your deposits". If the Government are to use building societies as agents they must ensure that the business is conducted in such a way and for such purposes as this Committee and the Government themselves will approve.
I was disappointed that on clear evidence of at least a doubt about sex discrimination the Government refused to put anything into the Bill, although the right hon. Gentleman must have felt some uneasiness in the matter since he was willing, and indeed anxious, to investigate this point again. Similarly, when we came to the question of survey fees, and the like, there was again on the Government side a reluctance to go beyond the bare minimum of financial status and to investigate in any way dealings between building societies and the public who borrow money from them.
In the instance just given we have been told that an agent of the Halifax Building Society, which may or may not come into this scheme—that is one of the great uncertainties at present—has been behaving on his own account in a way which certainly invites some comment and inquiry. Yet all that happens is that the building society in question says that he must have done it on his own account. It seems to me that those who act as agents in dealing with the advancement of money to people who want homes, particularly when those advances are made to comparatively poor people, must take a responsibility for their own conduct, and

their principals too must take responsibility for the choice and the conduct of those agents.
9.0 p.m.
Applying those principles to the Clause, the Government seem to be unwilling to take sufficient responsibility for the performance by the building societies in the proper way of the functions which the Bill intends them to have, just as the building societies on their own account in that instance—perhaps not in others—seem to be ready to dissociate themselves from those who are entitled to be described as their agents.
In both cases it is very largely a question of reputation. There is no doubt that a dealer in property in a small town who is able to put on the building the plate of an old and reputable society thereby gets a certain prestige. There is no doubt that a society which by the provisions of this Clause gets trustee status on its deposits will, in what has been called by the Government a highly competitive business, gain a considerable advantage, an advantage which will be gained either at the cost of other building societies or at the cost of other people who have to perform the function of lending money in this way, including local authorities.
Therefore, I have an uneasy feeling at the end of the discussion on the Clause that we are asked to consent to a financial transaction carrying with it implications of status and advertisement of some importance, and that we are being asked to consent to that while the Government at this early stage are apparently dissociating themselves from any social responsibility which the Clause will involve in the long run.
I regret that. We do not oppose the Bill. We do not think that it will make much difference. We do not think that the consequences of the Clause will be large. So far as they are important, it will be their social rather than their financial side which will matter. The right course in those circumstances is to let the Clause pass. We regret that a number of Amendments have been refused which would have made it a more humane and social Clause, and we shall now have to see how it works. I do not regard power to annul the regulations to be made as of very much practical importance, since


on such occasions amendment is impossible, time is limited, and the Government Whips are on.

Question put and agreed to.

Clause, as amended, ordered to stand part of the Bill.

Orders of the Day — Clause 2.—(EXCHEQUER ADVANCES TO BUILDING SOCIETIES.)

Mr. Maurice Macmillan: I beg to move, in page 2, line 29, after "direct", to insert:
Provided that, subject to subsection (3) of this section

(a) the rate of interest thereon so payable shall be less than the rate charged by a building society on a mortgage under this Act by not more than one half of one per cent.;
(b) the rate of interest charged by a building society on a mortgage under this Act shall not exceed the minimum rate recommended for the time being by the Building Societies Association for new mortgages for owner-occupation.

I am aware that Clause 2 (1) is normally the enabling provision for providing loans out of the Consolidated Fund, but because, as my right hon. Friend the Minister said on Second Reading, this is a special and unusual situation, I hope that it will be possible for the Minister to accept a special and unusual procedure.
It is partly that I am not happy about the link between the Building Societies Association recommended rate of interest with the rate to be charged by the Government. We all accept the Government's contention that we cannot make fixed interest loans to building societies which, over a large part of their business, charge variable rates.
Perhaps not all of us, but those on this side of the Committee, I think, would accept that a difference of one-half of 1 per cent. between the rate charged by the Government and that which a building society can charge on its lendings is an equitable compromise. I know that the average of building societies' costs is more than this margin, but there are societies with a narrower margin and there are certain other considerations that receiving the Government loan will entail to compensate them for receiving on the Government loan a margin which possibly is slightly less than they would like.
In defending this particular system set out in Appendix I of the White Paper, the Minister said on Second Reading:

'It is the traditional practice of the building societies to make loans at rates of interest which may be changed as time goes on. These changes in the lending rates of the societies are not made with great frequency. When they happen, they are a reflection of a definite change in the whole level of interest rates generally prevailing."—[OFFICIAL REPORT, 15th December, 1958; Vol. 597, c. 795.]
One of the difficulties and a reason why I put down this Amendment, is that they do not, in fact, reflect the general rates of interest prevailing without a considerable time-lag. The rates which the Building Societies Association recommends are quite obviously and necessarily chosen to suit all the members of the Association. I am not criticising the Association on this. This is recognised by the building societies themselves in that it is a recommended rate. Quite apart from whatever their position would be under the Restrictive Trade Practices Act if they, as well as the Government, tried to make it an enforced rate, they do not attempt to do so. It is a recommended rate. The Bill makes it compulsory if public funds are to be used to provide money in this way for house purchase.
Although I would prefer that the rate charged by the Government should not be linked with the Association's recommendation, could it not be done in a way which would allow individual societies to charge less—although not, of course, more—than the Building Societies Association's recommended rate without being precluded, as would happen under present arrangements, from participating in the Government scheme?

Mr. Albert Evans: Is the hon. Member saying that it might so happen that a society which was not a member of the Association would decide to charge a rate somewhat lower than that recommended by the Association? In that case, if that society did so, under the terms of the White Paper it would be excluded from the Government loans.

Mr. Macmillan: The hon. Member has slightly anticipated my argument. I was about to come to the position of various societies under the present arrangements as set out in the White Paper. If I may correct the hon. Member, this does not apply only to societies which are not members of the Building Societies Association, since there is no


reason why a building society should not charge a lower rate than that recommended and still remain a member of the Association.
The point at issue is the rate actually charged by the building societies. Under the arrangements set out in the White Paper, if a society were to charge less than the recommended rate one of two things would happen. Either it could not in fact take part in the scheme because the rate it charged would be the same or greater than the rate it was being charged by the Government—and there would not be the one-half of 1 per cent. differential; there would be nothing to stop it in law, although, in practice, it would not be able to take advantage of the Government scheme—or, in taking advantage of the Government scheme, it would have to discriminate against those buying pre-1919 houses through its officers as compared with owner-occupiers buying post-1919 houses. In other words, it would be forced to charge more to people buying older properties.
The intention of the Amendment is merely to enable the Minister to include in his scheme societies which are charging less than the recommended rate by charging those societies less than he is charging the others by the same one-half of 1 per cent. I must admit that, as it stands, the Amendment may well be unworkable and limit the Minister too much. The same difficulties that I found when dealing with Clause 1 in an attempt to suggest methods by which the Minister could make the scheme more liberal and easy to apply are there, but if pressed to a logical conclusion do, in fact, limit it. I think that is almost inevitable if the details of the scheme are not included in the Bill itself.
The last thing that I would want would be to force the Minister to change over, without amending legislation, from a rate of interest which was linked permanently to one-half of 1 per cent., but if the cost of building societies should go up it might well be that the Minister might want to have a slightly larger difference between what they are paying in and what is being paid by the mortgagees.
There is not the same argument that could be put forward for conditions of trusteeship status involved here, because in this case we are dealing only with the

loan to building societies. The question of trusteeship does not come into it at all. Therefore, there is, perhaps, not quite the same need for precision in laying down conditions at this stage.
The Minister has also seen fit to specify in detail certain other arrangements about these loans but that is not, of course, to say that he should or can specify the conditions as to rates of interest which are necessarily changing and are more liable to change than the question of amount or proportion such advances bear to the total amounts already outstanding. I am extremely anxious that every effort should be made to include in the loans societies that are charging a rate of interest less than that recommended by the Building Societies Association. There are, in fact, societies which charge more and I am not suggesting that they should be helped in any way, but where an individual society wants to charge a lower rate of interest than that recommended by the Association or where it wants to lower its rate of interest before the Association wishes or recommends it to do so, I think it most unfortunate that to enable people to buy houses at a lower rate of interest it should then jeopardise its position under the scheme.
I would be most grateful to the Minister if he could tell us that these problems are in his mind. I do not ask him to commit himself tonight on this complicated and difficult problem. If he can give some assurance that he is not anxious to help building societies to keep up their rates of interest, but will consider methods by which they will be brought down. I for one would be quite satisfied.

9.15 p.m.

Mr. H. Brooke: This is a starred Amendment, which has just appeared on the Order Paper, and my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) has moved it persuasively and cogently. It is no secret that it is an Amendment not without relation to the society which bears the honoured name of his constituency.
My hon. Friend asked me to consider the Amendment sympathetically. He showed recognition of the difficulties. I say, frankly, at the outset that this matter is not without its difficulties. In advising the House of Commons one has to decide which course involves the least


formidable difficulties. I can assure my hon. Friend and the Committee that the Government have no desire whatever to take any action which will, as it were, artificially keep up the rate of interest that societies charge to those who are purchasing houses through them. Indeed, one desires to see the greatest amount of competition, but there are difficulties, as f am sure my hon. Friend appreciates, in the course which he advocates.
I would remind the Committee of what was said in Appendix I of the White Paper in the outline of the agreed scheme it is stated:
All Building Societies participating in the scheme will be charged the same rate.…
My hon. Friend's Amendment cuts clean across that. His Amendment envisages a situation where, if one or more societies are charging their borrowers a rate lower than that recommended by the Building Societies Association, that society or those societies will be enabled to claim Exchequer advances at an interest rate lower than that which is being charged to other societies.
There are difficulties whatever course one follows, but I must admit to the Committee that the difficulty in the way of lending Exchequer money at different rates of interest to parallel bodies which are in competition with one another is very serious. Having carefully considered what my hon. Friend has said, I cannot commend to the Committee a plan under which Exchequer advances would be made to different societies, in one case at 5½ per cent., in another at 5 per cent., and in another perhaps at a different rate. However sympathetic we may be with the particular circumstances which I know that my hon. Friend has in mind, hearing in mind that it is public money of which we are speaking, I gravely doubt whether we could defend a situation in which Exchequer advances were being made at different rates to different societies.
That, frankly, has to be my summing up of the situation. I am not pooh-poohing anything that my hon. Friend has said. I am not denying that there are problems here. In general, I like to see initiative. I like to see those who are prepared to take risks beyond those which their neighbours—and I am not sure whether I should say "their friends"—are taking; and any society which

charges a rate below that which other societies are charging is presumably taking a greater degree of risk thereby.

Mr. E. Fernyhough: Would the Minister say whether that differentiation about which he is so concerned in lending to building societies applies to lending both to the private sector and to the public sector if the Bill goes through?

Mr. Brooke: That may be so, but I am now addressing myself to an Amendment that would operate within the private sector. I certainly cannot think of any case in which Exchequer money is being lent at different rates of interest to private organisations in direct competition with each other. It is that proposition that I cannot commend to the Committee.
If hon. Members ponder this, I think that they will appreciate the force of my argument. I know that there is a difficulty, and I sympathise with my hon. Friend—if I may say so, I think that he has put the Halifax case extremely well—but I do not believe that any Government could, in fact, envisage a situation in which, for the same purpose, they were making advances of public money at different rates of interest to parallel building societies in competition one with another.

Mr. Mitchison: Where are the restrictive practices to be found now? The hon. Member for Halifax (Mr. Maurice Macmillan) said that he thought the Building Societies Association did no more than recommend the rate to its members because, if it went further, it might get into trouble over restrictive practices. Perhaps he pushed it a little far. I am beginning to wonder whether I ought to haul my bank before the court in respect of the interest it charges on my overdraft—but be that as it may.
I trust that the right hon. Gentleman really does not think that what he has just said appeals to the Committee. He knows perfectly well that the object of the Amendment is simply to allow a society to lend at a lower rate if that society, in the exercise of its independent judgment—something much valued by the Tory Party in this competitive world —thinks that it can profitably do so. The effect of the rejection of this Amendment will be to oblige the society to choose between getting the advantages of this


scheme and keeping to the rate at its present level. If it wants the advantages it will have to raise its rate. That is the problem that, as all of us know, as every newspaper and very many people in the country know, has been facing the Halifax Society ever since these proposals were first negotiated with the building societies—the Halifax itself not, of course, being a member of the Association, at any rate at the moment.
What the Minister is really asking us to do is to force that choice on the Halifax. Supposing the Halifax thinks that it is good business—and I would not put it out of its mind to suppose that it might also be a social advantage—to lend at half of one per cent. lower than the other societies in this fiercely competitive business, as we have been told that it is, the other societies will then get the trustee status for their deposits presented to them by the Government, while what is probably the largest society of all will not get that status.
It really does illustrate the artificiality of the Government's insistence on this very rigid machinery which, apparently, the Building Societies Association has succeeded in imposing on them. I say to the Minister and to the Government that if this Bill is to serve any of the purposes that the Government hope it will serve, the building societies will, in effect, be the agents of the Government in the buying and improving of houses.
The Government think that in that respect the building societies have a special and useful function. I think that the idea is an exaggerated one, but if it is right, surely it is not for the principal in a matter like this to oblige his agent to charge the public more than the agent himself wants to charge the public. That is what the refusal of this Amendment comes to.
There may be technical difficulties in the proposal—I have not seen any myself—but its real object and purpose are perfectly plain to see. In no circumstances could it raise the rate charged to the public borrower and, in other cases, as in the case of the Halifax, it would definitely lower it.
These associations and, for that matter, Government Departments, too, necessarily move rather slowly. If they move slowly in making changes, it is no bad thing

that a large and responsible society should take a step in the right direction on its own account and give other people a lead. There is no question of disloyalty to the building society movement or anything of that kind. The Halifax is not a member of the Association. The common rate of interest is merely a recommended rate, and we can all think of many cases in which more than the recommended rate has been charged by building societies.
I congratulate a hard-headed North Country society which says that it can do well—and it does, in fact, do well—by lending at a lower rate than the others. I would like the others to follow, and I should like it to be possible for there to remain some inducement for a forward-looking society to give a lead in the right direction to the rest.
We hear talk about freedom of judgment and freedom of business. I do not know what has happened to the party opposite, and I do not know what right hon. and hon. Members opposite think they are doing about this.

Mr. Lindgren: Tory freedom?

Mr. Mitchison: As my hon. Friend the Member for Wellingborough (Mr. Lindgren) says, what about Tory freedom? If there ever was something imposed in the wrong sense on a reluctant and competent person who was willing to work for his principle, this is really it.
I will take up just one other point. The Government, in future, in a competitive business, the right hon. Gentleman says, is not going to lend to different bodies at different rates. I cannot remember the rate at which they recently lent £50 million to Colvilles. The fact that it has been done at that rate and that that statement has been made on behalf of the Government will, no doubt, be of interest to the steel manufacturers of the country if they have time to think about their business instead of politics.

Mr. Graham Page: The extravagant argument put by the hon. and learned Member for Kettering (Mr. Mitchison) nearly changed my mind against him. I am rather in favour of what he was endeavouring to express, but not in those extravagant terms.
With the greatest respect to my right hon. Friend, the argument of my hon.


Friend the Member for Halifax (Mr. Maurice Macmillan) appealed to me more than the argument put by my right hon. Friend. I am sure that we wish to encourage building societies which are able to reduce their rates of interest, and we do not wish to penalise them. More than that, we would not wish them to penalise the borrowers on pre-1919 houses, as, I think, would necessarily follow if building societies such as the Halifax which charge a lower rate of interest desired to take advantage of the scheme. They would have to raise the rate of interest to the Building Societies Association's recommended rate if they were lending on pre-1919 houses and wished to take advantage of borrowing on that basis.
My right hon. Friend said that the Government do not wish to keep up the rate of interest artificially. If the present proposals were carried out, that might very well happen. Also, he said that it was desirable that all building societies should be charged the same rate and that one building society should not get the benefit of the lower rate of interest on its borrowings from the Treasury compared with another society. But, surely, it deserves that lower rate if it is able to pass it on to the public, that is to say, from the borrowers from it.
In making what was, I think, his main ground of argument, the difficulty of lending at different rates of interest, my right hon. Friend was really straining at a gnat. We already intend to fix the, rate of interest at a figure settled by an association completely independent of the Government. It is not the Treasury which is fixing the rate of interest at which money is being lent by it, but an independent body, the Building Societies Association, by recommending a certain rate, and the Treasury lends at ½ per cent. below. Having gone that far in taking it out of the hands of the Treasury to fix the rate at which it lends its money, surely we can go one step further and say that if a building society is able to reduce its rates to borrowers, then the Treasury should lend money at the ½ per cent. lower than that reduced rate.
9.30 p.m.
I hope that my right hon. Friend will be able to consider this matter again before the next stage of the Bill. I am sure that it is a point which appeals to

both sides of the Committee. Of course we realise the grave difficulty in accepting an Amendment such as this. My hon. Friend the Member for Halifax (Mr. Maurice Macmillan) has, by means of this Amendment, raised a very important point, and I hope that my right hon. Friend will say that he will give it further consideration with Treasury officials.

Mr. A. Evans: I was surprised at the Minister's reply to the argument put forward on the Amendment. He told the Committee that this was a starred Amendment and, therefore, it appeared on the Amendment Paper only today. I cannot persuade myself that the Minister and his Department had not considered the vital principle involved before today. The whole matter has been common knowledge throughout the country for some months, and one would have thought that the Minister, even while preparing the Bill, would have given close consideration to the principle of the Amendment.
I submit that not only the Halifax Building Society is concerned here. We know that the hon. Member who moved this Amendment sits for Halifax and that the society which has taken the courageous initiative in lowering interest charges happens to be called the Halifax Building Society, but this is not, as the Minister seemed to suggest, just a Halifax case. A very important principle is involved.
It seems to me that the question we have to ask ourselves is whether the Government should waste public money by encouraging building societies to charge higher interest rates on mortgages than they find is necessary. The Government say, "Yes, we have to encourage higher interest rates on mortgages," and the reason that the Minister gave for that amazing point of view was that it would not be possible for the Treasury to charge varying rates of interest to competitive bodies in the same sphere. Why would it not be possible? The Minister went so far as to say that no Government dare do this outrageous thing, namely, charge different rates of interest to competitors in the same sphere. What is the difficulty? Why cannot the Treasury adjust the rate of interest? The house purchaser has had little help from the Government so far and is suffering under a shocking burden of interest as a result of Government policy, so shocking that few of us


realise that families are in pawn for probably the whole of their working lives because of the high rates of interest which the Government have encouraged.

Mr. Page: At least they have got their houses.

Mr. Evans: Perhaps they have all got houses in Croydon. Perhaps the housing problem in Croydon is solved, perhaps it is not, but I shall not be led astray on that point.

Mr. Page: The hon. Member says that perhaps Croydon has the houses. Indeed it has. The council has built a very large number of houses in Croydon since the party opposite was in power.

Mr. Evans: In Croydon, we have the rather disturbing spectacle of the local council having to evict tenants from its houses to make way for the people who are in inadequate accommodation. I cannot, however, pursue that further; it is not in keeping with the Amendment.
If it is understood in the country that the Government have reached the stage when they must encourage the maintenance of high interest rates charged by building societies, I am sure that no owner-occupier or person seeking to buy his house will thank the Government, but, on the contrary, will turn away from the Government.
The Minister must consider the Amendment carefully. Although it is a starred Amendment he must give it further thought I hope that, apart from party politics, he will see his way to encourage the downward trend of interest rates which the Halifax Building Society has started.

Mr. Sparks: I take it that the Minister is basing the interest rate that will be charged to the building societies for Exchequer advances upon the rate fixed by the Building Societies Association. It has been said that that rate will be one-half of 1 per cent. below the minimum rate fixed by the Building Societies Association, which in this case would be about 5½ per cent. We are always told that the interest rates charged by building societies are dependent upon the amount of money that the societies can attract by way of investment. The greater the investment in the building societies, the lower should be the rate of interest.
According to the Explanatory Memorandum, the building societies are now advancing something like £40-£50 million on the purchase of pre-1919 houses and £330 million a year for the purchase of newer houses, making a total of about £380 million. The Minister proposes to put into the pool an additional £100 million, or to advance the amount of money available for this purpose by, roughly, an additional 25 per cent. beyond what is already being used for the purpose by the building societies.
The inflow of at least £100 million, if not more, of Government funds should largely overcome the deficiency in investment in the building societies which makes it necessary to raise the rate of interest. I suggest that when the Bill goes through and the Minister makes £100 million available for this purpose the rate of interest charged or fixed by the Building Societies Association should fall, because the scarcity of available investments will be very largely overcome. I am wondering whether the right hon. Gentleman has considered that. He may well decide to advance more than £100 million, and he has the power to do that here. In fact, he has the power to make up almost completely the shortage of funds now experienced by way of investment for this purpose, so that there ought to be an inflow of investment into the building societies—such an inflow as they have not experienced for a very long time—and that, in itself, ought to cause a reduction in the rate of interest fixed by the Building Societies Association.
In regard to the Halifax Building Society, it would be helpful to know what its position is. No one knows whether that society wants to take advantage of this scheme or not. It may not want to do so. It may have sufficient funds and may not want any more. It may not want to invest in this kind of property, or it may; nobody knows. Therefore, it does not follow that all building societies will want to take advantage of the offer in this scheme, but I should have thought that the right hon. Gentleman could have given us a much more optimistic idea of the likely rate of interest to be fixed, having in mind the fact that the funds to be made available for this purpose are to be considerably augmented. I should have thought that that would have led to a reduction in the rate of interest charged


by building societies and that it would automatically have brought into benefit the Halifax Building Society, unless, of course, that Society reduces still further rate of interest.

Mr. Fernyhough: I know that the Committee is anxious to come to a decision, but there are two points that I should like to make. First of all, I hope that the right hon. Gentleman realises the difficulty that he is now facing arising solely from his doctrinaire approach to the problem. If he had wanted to do so he could have done this through the local authorities and the building societies need never have been brought in at all. The right hon. Gentleman is now faced with giving a decision which is an affront even to his own supporters.
I hope the hon. Member for Halifax (Mr. Maurice Macmillan) might be able to induce the Halifax Building Society to go to the Market Research Bureau and get them to send a few people knocking on a few million doors to ask them whether they are in favour of interest rates being brought down, or whether they do not believe that the Government are wrong in producing this scheme for them to buy their own houses by having to pay more interest than would have been necessary if the right hon. Gentleman had accepted the Amendment of his hon. Friend the Member for Halifax.
That is all I wish to say at this stage. There is much more I should like to say, but I know that the Committee is anxious to come to a decision and, in order to comply with the wishes of my Front Bench, I will resume my seat.

Mr. Maurice Macmillan: I should like to thank the Minister for his explanation. I see his difficulty, though, with respect, I do not think it is as great as he himself thinks. Since this is an unprofitable activity on the part of building societies, and in so far as it benefits them at all, it benefits them by increasing their business generally, and not by making profits out of this operation in particular; it is, therefore, of benefit to them, no matter what the rate of interest is.
I should like to point out that I am not speaking on behalf of the Halifax Building Society. Like the hon. Member for Acton (Mr. Sparks), I do not even know what its views are on this Amend-

ment, and whether it wants to take advantage of the scheme or not, but I am rather flattered by the influence which I am supposed to have on it. The Society has not, in fact suggested or even helped to draft the Amendments which I have put forward. Personally, I think that the hon. and learned Member for Kettering (Mr. Mitchison) rather over-excited himself over the pathetic plight of the Halifax Building Society, desperate because this scheme will not help it to increase its number of loans on pre-1919 houses—considering that the society has already a higher proportion of its business in that class of house than any other society in England. From my limited knowledge of the Society, I do not think that it is likely to be seriously affected one way or the other.
9.45 p.m.
I must confess I am disappointed in some ways at the Minister's reply, but I am not suggesting that the Committee should press the Amendment to a Division—[HON. MEMBERS: "Why not?"]—because possibly owing to the fact that the Amendment was drafted entirely by me unaided there is a serious error which I have seen only since this debate started. It is that the Amendment is forcing the Minister to charge a specific rate of interest without any possibility of altering it except by amending legislation. I apologise to you, Sir Gordon, and to the Committee for the mistake.
The first words of the Amendment are
Provided that, subject to subsection (3) of this section—
Subsection (3) as it stands bears no reference whatsoever to this subsection (1) and, therefore, that first phrase of the Amendment is entirely irrelevant. From the rest of the Amendment it is painfully obvious that the result of it is to force the Minister to charge a maximum differential, so to speak, of one-half of 1 per cent. Although I am in no way briefed to defend building societies' interests I am sufficiently concerned with them not to try to force the Minister to a Division. Moreover, it is, incidentally, quite illogical that we should make this part alone of the Bill alterable only by amending legislation. Therefore, I beg to ask leave to withdraw the Amendment.

Hon. Members: No.

Mr. Mitchison: The point which the hon. Gentleman has just made is more ingenious than convincing, and what we are concerned about at the moment is the principle and the intention of the Amendment. Any drafting difficulty of

the sort he mentioned could, of course, be put right at a later stage.

Question put, That those words be there inserted:—

The Committee divided: Ayes 166, Noes 199.

Division No. 32.]
AYES
[9.50 p.m.


Alnsley, J. W.
Hannan, W.
Paget, R. T.


Allaun, Frank (Salford, E.)
Hastings, S.
Paling, Rt. Hon. W. (Dearne Valley)


Allen, Arthur (Bosworth)
Hayman, F. H.
Palmer, A. M. F.


Allen, Scholefield (Crewe)
Healey, Denis
Parker, J.


Awbery, S. S.
Harbison, Miss M.
Parkin, B. T.


Bacon, Miss Alice
Hobson, C. R. (Keighley)
Pentland, N.


Balfour, A.
Holman, P.
Plummer, Sir Leslie


Bence, C.R. (Dunbartonshire, E.)
Holmes, Horace
Popplewell, E.


Benson, Sir George
Houghton, Douglas
Prentice, R. E.


Beswick, Frank
Hughes, Cledwyn (Anglesey)
Price, J. T. (Westhoughton)


Blackburn, F.
Hughes, Emrys (S. Ayrshire)
Probert, A. R.


Blenkinsop, A.
Hughes, Heotor (Aberdeen, N.)
Pursey, Cmdr. H.


Blyton, W. R.
Hunter, A. E.
Randall, H. E.


Boardman, H.
Hynd, J. B. (Attercliffe)
Rankin, John


Bonham Carter, Mark
Irving, Sydney (Dartford)
Reynolds, G. W.


Bowden, H. W. (Leicester, S.W.)
Isaaes, Rt. Hon. G. A.
Rhodes, H.


Bowen, E. R. (Cardigan)
Janner, B.
Roberts, Albert (Normanton)


Boyd, T. C.
Jay, Rt. Hon. D. P. T.
Roberts, Goronwy (Caernarvon)


Braddock, Mrs. Elizabeth
Jeger, George (Goole)
Rogers, George (Kensington, N.)


Brockway, A. F.
Johnson, James (Rugby)
Royle, C.


Broughton, Dr. A. D. D.
Jones, Jack (Rotherham)
Silverman, Julius (Aston)


Brown, Thomas (Ince)
Jones, J. Idwal (Wrexham)
Skeffington, A. M.


Burke, W. A.
Key, Rt. Hon. C. W.
Slater, Mrs. H. (Stoke, N.)


Burton, Miss F. E.
King, Dr. H. M.
Slater, J. (Sedgefield)


Castle, Mrs. B. A.
Lawson, G. M.
Smith, Ellis (Stoke, S.)


Champion, A. J.




Chetwynd, G. R.
Lee, Frederick (Newton)
Sorensen, R. W.


Cliffe, Michael
Lee, Miss Jennie (Cannock)
Soskice, Rt. Hon. Sir Frank


Collick, P. H. (Birkenhead)
Lindgren, G. S.
Sparks, J. A.


Corbet, Mrs. Freda
Logan, D. C.
Spriggs, Leslie


Craddook, George (Bradford, S.)
Mabon, Dr. J. Dickson
Steele, T.


Crossman, R. H. S.
McCann, J.
Stewart, Michael (Fulham)


Davies, Harold (Leek)
MacColl, J. E.
Stones, W. (Consett)


Davies, Stephen (Merthyr)
MacDermot, Niall
Taylor, Bernard (Mansfield)


Deer, G.
McGhee, H. G.
Taylor, John (West Lothian)


Delargy, H. J.
Mclnnes, J.
Thomas, George (Cardiff)


Donnelly, D. L.
McKay, John (Wallsend)
Thomson, George (Dundee, E.)


Dugdale, Rt. Hn. John (W. Brmwoh)
McLeavy, Frank
Thornton, E.


Ede, Rt. Hon. J. C.
MacMillan, M. K. (Western Isles)
Timmons, J.


Edwards, Rt. Hon. John (Brighouse)
MacPherson, Malcolm (Stirling)
Tomney, F.


Evans, Albert (Islington, S.W.)
Mahon, Simon
Usborne, H. C.


Evans, Edward (Lowestoft)
Mainwaring, W. H.
Warbey, W. N.


Fernyhough, E.
Mallalieu, E. L. (Brigg)
Watkins, T. E.


Finch, H. J.
Mann, Mrs. Jean
Weitzman, D.


Fitch, Alan
Marquand, Rt. Hon. H. A.
Wells, William (Walsall, N.)


Fletcher, Eric
Mason, Roy
Wilkins, W. A.


Foot, D. M.
Mitchison, G. R.
Willey, Frederick


Forman, J. C.
Moody, A. S.
Williams, David (Neath)


Fraser, Thomas (Hamilton)
Morris, Percy (Swansea, W.)
Williams, Rt. Hon. T. (Don Valley)


George, Lady Megan Lloyd(Car'then)
Mort, D. L.
Williams, W. R. (Openshaw)


Gibson, C. W.
Moyle, A.
Winterbottom, Richard


Grenfell, Rt. Hon. D. R.
Mulley, F. W.
Woodburn, Rt. Hon. A.


Grey, C. F.
Neal, Harold (Bolsover)
Woof, R. E.


Griffiths, Rt. Hon. James (Lianelly)
Oliver, G. H.
Yates, V. (Ladywood)


Griffiths, William (Exchange)
Oram, A. E.



Hale, Leslie
Oswald, T.
TELLERS FOR THE AYES:


Hamilton, W. W.
Padley, W. E.
Mr. Pearson and Mr. Simmons




NOES


Agnew, Sir Peter
Barlow, Sir John
Boyle, Sir Edward


Aitken, W. T.
Barter, John
Bralne, B. R.


Allan, R. A. (Paddington, S.)
Batsford, Brian
Bromley-Davenport, Lt.-Col. W. H.


Anstruther-Gray, Major Sir William
Baxter, Sir Beverley
Brooke, Rt. Hon. Henry


Arbuthnot, John
Bell, Philip (Bolton, E.)
Brooman-White, R. C.


Armstrong, C. W
Bennett, F. M. (Torquay)
Browne, J. Nixon (Cralgton)


Ashton, H.
Bevins, J. R. (Toxteth)
Bullus, Wing Commander E. E.


Atkins, H. E.
Biggs-Davison, J. A.
Burden, F. F. A.


Baldock, Lt.-Cmdr. J. M.
Bingham, R. M.
Butcher, Sir Herbert


Baldwin, Sir Archer
Birch, Rt. Hon. Nigel
Carr, Robert


Balniel, Lord
Bishop, F. P.
Channon. P


Barber, Anthony
Black, Sir Cyril
Chichester-Clark, R.




Clarke, Brig. Terence (Portsmth, W.)
Hulbert, Sir Norman
Peyton, J. W. W.


Cole, Norman
Hurd, Sir Anthony
Pickthorn, Sir Kenneth


Cooper, A. E.
Hutchison, Michael Clark(E'b'gh, S.)
Pilkington, Capt. R. A,


Cooper-Key, E. M.
Hutchison, Sir Ian Clark (E'b'gh, W.)
Pitt, Miss E, M.


Cordeaux, Lt.-Col. J. K.
Hylton-Foster, Rt. Hon. Sir Harry
Powell, J. Enoch


Corfield, F. V.
Irvine, Bryant Godman (Rye)
Price, David (Eastleigh)


Craddock, Beresford (Spelthorne)
Jenkins, Robert (Dulwich)
Price, Henry (Lewisham, W.)


Crosthwaite-Eyre, Col. O. E.
Jennings, J. C. (Burton)
Rawlinson, Peter


Crowder, Sir John (Finchley)
Jennings, Sir Roland (Hallam)
Redmayne, M.


Crowder, Petre (Ruislip—Northwood)
Johnson, Dr. Donald (Carlisle)
Rees-Davies, W. R.


Cunningham, Knox
Johnson, Eric (Blackley)
Ridsdale, J. E.


Dance, J. C. G.
Kaberry, D.
Rippon, A. G. F.


Davidson, Viscountess
Keegan, D.
Roper, Sir Harold


Deedes, W. F.
Kerr, Sir Hamilton
Ropner, Col. Sir Leonard


Donaldson, Cmdr. C. E. MoA.
Kershaw, J. A.
Russell, R. S.


Doughty, C. J. A.
Kirk, P. M.
Scott-Miller, Cmdr. R.


du Cann, E. D. L.
Lambton, Viscount
Sharpies, R. C.


Duncan, Sir James
Lancaster, Col. C. G.
Shepherd, William


Eden, J. B. (Bournemouth, West)
Leavey, J. A.
Spence, H. R. (Aberdeen, W.)


Elliott,R.W.(Ne'castle upon Tyne, N.)
Legge-Bourke, Maj. E. A. H.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Emmet, Hon. Mrs. Evelyn
Legh, Hon. Peter (Petersfield)
Steward, Sir William (Woolwich, W.)


Errington, Sir Eric
Lindsay, Hon. James (Devon, N.)
Storey, S.


Erroll, F. J.
Lindsay, Martin (Solihull)
Stuart, Rt. Hon. James (Moray)


Fell, A.
Linstead, Sir H. N.
Studholme, Sir Henry


Finlay, Graeme
Lloyd, Maj. Sir Guy (Renfrew, E.)
Summers, Sir Spencer


Fisher, Nigel
Loveys, Walter H.
Sumner, W. D. M. (Orpington)


Fraser, Hon. Hugh (Stone)
Lucas-Tooth, Sir Hugh
Taylor, William (Bradford, N.)


Freeth, Denzil
Macdonald, Sir Peter
Teeling, W.


Gammans, Lady
Mackeson, Brig. Sir Harry
Temple, John M.


Garner-Evans, E. H.
Maclean, Sir Fitzroy (Lancaster)
Thomas, Leslie (Canterbury)


Gibson-Watt, D.
McLean, Neil (Inverness)
Thomas, P. J. M. (Conway)


Glover, D.
Macpherson, Niall (Dumfries)
Thompson, R. (Croydon, S.)


Glyn, Col. Richard H.
Maddan, Martin
Thornton-Kemsley, Sir Colin


Godber, J. B.
Maitland, Cdr. J. F. W. (Horncastle)
Tilney, John (Wavertree)


Goodhart, Philip
Maitland, Hon. Patrick (Lanark)
Turner, H. F. L.


Cower, H. R.
Manningham-Buller, Rt. Hn. Sir R.
Turton, Rt. Hon. R. H.


Graham, Sir Fergus
Markham, Major Sir Frank
Tweedsmuir, Lady


Green, A.
Marlowe, A. A. H.
Vane, W. M. F.


Gresham Cooke, R.
Marshall, Douglas
Vickers, Miss Joan


Grimston, Hon. John (St. Albans)
Mathew, R.
Wakefield, Edward (Derbyshire, W.)


Grosvenor, Lt.-Col. R. G.
Mawby, R. L.
Wakefield, Sir Wavell (St. M'lebone)


Gurden, Harold
Maydon, Lt-Comdr. S. L. C.
Wall, Patrick


Hall, John (Wycombe)
Milligan, Rt. Hon. W. R.
Ward, Rt. Hon. G. R. (Worcester)


Harrison, Col. J. H. (Eye)
Mott-Radolyffe, Sir Charles
Ward, Dame Irene (Tynemouth)


Harvey, Sir Arthur Vere (Macclesf'd)
Nairn, D. L. S.
Webbe, Sir H.


Hill, Rt. Hon. Charles (Luton)
Neave, Airey
Webster, David


Hill, Mrs. E. (Wythenshawe)
Noble, Michael (Argyll)
Whitelaw, W. S. I.


Hobson, John(Warwick &amp; Leam'gt'n)
Oakshott, H. D.
Williams, Paul (Sunderland, S.)


Holland-Martin, C. J.
O'Neill, Hn. Phelim (Co. Antrim, N.)
Wills, Sir Gerald (Bridgwater)


Horobin, Sir Ian
Orr, Capt. L. P. S.
Wilson, Geoffrey (Truro)


Horsbrugh, Rt. Hon. Dame Florence
Orr-Ewing, C. Ian (Hendon, N.)
Wolrige-Gordon, Patrick


Howard, Gerald (Cambridgeshire)
Page, R. G.
Wood, Hon. R.


Howard, Hon. Greville (St. Ives)
Pannell, N. A. (Kirkdale)
Woollam, John Victor


Hughes Hallett, Vice-Admiral J.
Partridge, E.



Hughes-Young, M. H. C.
Peel, W. J.
TELLERS FOR THE NOES:




Mr. Bryan and Mr. J. E. B. Hill.

Mr. H. Brooke: I beg to move, in page 2, line 39, at the end to insert:
or in the Metropolitan Police District or the City of London, three thousand pounds.
When the Bill was first published, two months ago, some criticism was directed against the point that it ignored the known difference of values in and outside London which has been recognised in rent restriction legislation and elsewhere for many years. I said in the debate on Second Reading that I took note of that criticism, that I would consider it further and that I would discuss the matter with the representatives of the building societies.
The outcome of that undertaking is this Amendment which fixes a different and higher figure, £3,000, for London

and the Metropolitan Police District as distinct from the £2,500 which will operate for the rest of the country. I think that it is a wise differentiation and I hope that the Committee may be disposed to agree to it.

Mr. Mitchison: I must ask the right hon. Gentleman for rather more information about this Amendment. We all recognise that there is a difference between London prices for the purchase of houses and provincial prices for the purchase of houses, just as there is a difference in rents in the two parts of England. The right hon. Gentleman introduced into the Rent Act, if he remembers, a £40 limit for London and a £30 limit for the provinces. We also had a £30 limit for Scotland. What the


Minister proposes to do now is to introduce a much smaller differential, and to introduce it only as between Greater London, on the one hand, and the provinces, on the other.
No doubt the right hon. Gentleman will have had information from the building societies of which he did not tell us, but there is another question which ought to be considered. The demand for these houses and the price of them varies with the supply, and this means, in effect, that it varies with the shortage of housing accommodation in different parts of the country. Housing accommodation, particularly in large towns other than London, may more often be a question of the amount of space available for the purpose, and occasionally a question of the character and extent of the existing estates and other houses in the city. I hope that we shall hear from the right hon. Gentleman tomorrow what consideration he has given to that matter and whether he thinks that the maximum—

It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress; to sit again Tomorrow.

EUROPEAN MONETARY AGREEMENT BILL

Considered in Committee [Progress. 3rd February.]

[Sir GORDON TOUCHE in the Chair]

Clause 1.—(USE OF EXCHANGE EQUALISATION ACCOUNT FOR PURPOSES OF EUROPEAN MONETARY AGREEMENT.)

Question again proposed, That the Clause stand part of the Bill.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 2.—(ISSUES FROM CONSOLIDATED FUND AND PAYMENTS INTO EXCHEQUER.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

10.2 p.m.

Mr. John Edwards: When we considered the Bill on Second Reading, attention was

concentrated on the broad questions of convertibility, which had been raised in the Amendment proposed by my right hon. Friend the Leader of the Opposition. Apart from a short exposition by the Chancellor and a short comment by my right hon. Friend, there was scarcely any reference to the actual European Monetary Agreement. Now that we have been able to refresh our minds by seeing the text of Cmd. 9602, which is now in the Vote Office, there arise a few questions which I want to put to the Economic Secretary.
The Clause authorises the issue from the Consolidated Fund of the moneys which are needed for three purposes: first, to meet the calls which may be made upon or in respect of Article III of the Agreement; secondly, to meet any calls which would arise from liquidation of the Fund as set out in the Annexe to the Agreement; thirdly, to provide in the case of default on the part of any contracting party, as set out in Article XII. My first question concerns Article III of the Agreement, under which we and the other contracting parties have an obligation to make contributions. The United Kingdom contribution is 86,575,000 units of account.
The Economic Secretary will remember that on Second Reading his right hon. Friend referred to those contributions and said that it had been accepted that circumstances had changed a good deal since 1955 and that the right relationships of quotas to each other were now to be further examined. Can the hon. Gentleman say any more about that? It is worth remembering that under the Agreement as it now stands our quota comprises a little more than one-quarter of the total amount of contribution, that is to say, we are required to pay more than twice what anyone else is required to pay. Indeed, our contribution is greater than that of France and Germany taken together.
That is a point about which it would be interesting to hear from the Economic Secretary. Does he think that our contributions will be lower or higher in proportion as a result of the discussions which are going on? As I understand, this amount of about £31 million sterling does not necessarily have to be paid all at once. Would the Economic Secretary tell us how much of this he expects would be


called upon in the near future, or whether he thinks a great deal of it will not be required for some time to come?
I need not say anything about the liquidation provisions, but I wish to say a few words about the obligation which may fall upon us—in reference to Clause 2—in respect of any default on the part of a contracting party. This is all set out in Article XII of the Agreement. If credits are not forthcoming, or for any other reason, we may find ourselves in a position in which we have to take our share of the amount involved in any default, but for there to have been a default will have meant that the normal system of settlement will have failed. Can the hon. Gentleman tell us anything more about the way in which he thinks the settlement will operate?
Is it seriously suggested that no credits whatever would be available unless all the representatives are in agreement? Are we to face a situation in which one of the countries concerned—no matter who—could veto the granting of credits even if all the rest were agreeable? That is a serious matter and I think it would produce circumstances in which Article XII might have to come into operation although, of course, we would all hope that would not be the case.
If the Economic Secretary would be good enough to answer these questions, that will enable us to see more clearly the definite effect of the Bill. There may be points arising on other Clauses, but these seem strictly appropriate to Clause 2.

The Economic Secretary to the Treasury (Mr. F. J. Erroll): I shall try to deal briefly with the points raised by the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards).
Our major contribution under the Agreement is the payment involved, to the extent and at the time required, of the contribution we have agreed to make. The United Kingdom's total contribution was fixed in 1955 at 86,575,000 units of account, which is just under £31 million. The contributions of member countries were based in 1955 on their E.P.U. quotas. The relationship between them is now due for re-examination, but I am sorry to say I cannot fully meet the wishes of the right hon. Member because it is too early yet to say what may be

expected from the review which is being carried out by the O.E.E.C.

Mr. J. Edwards: The hon. Gentleman would agree that in the new circumstances our quota is high in relation to the rest and we should be aiming at getting a fairer quota in all the new circumstances? Something over a quarter of the total sum seems rather high in view of the changed situation, for example, in Germany.

Mr. Erroll: I appreciate the point the right hon. Member has made, but I should prefer not to comment further on the matter while it is under discussion by the O.E.E.C. The 1955 figure, incidentally, is the maximum authorised by subsection (1) of Clause 2, so there is no question of Parliament finding that we have made a bigger contribution than what was agreed in 1955. The existing maximum may be increased by Treasury order, but only if approved by affirmative Resolution of this House under subsection (2) of Clause 3.
The calling up of contributions to the Fund is a progressive matter, and it would be rather complicated to explain it to the Committee. I have the details of how the contributions will be called up if hon. Members wish to hear more about that during the course of the debate.
The question of default was referred to briefly last night by the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith). The last sentence of subsection (1) of Clause 2 enables us to pay our share of dollars if necessary under the default arrangements mentioned by the Chancellor of the Exchequer during the debate a week ago last Wednesday.
We felt that it was prudent to provide in the Agreement against the possibility of settlement defaults and also to avoid the risk of their becoming an excessive burden on the fund. We are going on no fewer than eight years' experience of E.P.U. and we do not expect that there will be any country likely to default in its monetary settlements, as none has done so during the last eight years. I should mention in passing that the Agreement itself provides severe enough sanctions in our view to deter any member from defaulting if this could possibly be avoided.
The only other point which I should like to make in connection with defaults


is that Clause 2 (3) gives the Treasury the power to borrow in order to make the necessary payments from the Consolidated Fund, except in the case of payments under the default arrangements which are separately treated in the following way. We should have to help in bearing the burden of a default. The claims which we should get in return would inevitably be of uncertain maturity, and so we thought it suitable that such payments should come out of the Consolidated Fund as a charge against revenue and not be met by borrowing.
I think that those were the points which were made by the right hon. Gentleman, with one exception. That was the point regarding a single country standing out against an agreement to permit a country to default. That is a matter for the parties to the Agreement. In the first instance, the Board would review the matter and would report to the members, who would then have to arrive at a decision in the light of the circumstances prevailing at the time.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 3 and 4 ordered to stand part of the Bill.

Schedule agreed to.

Bill reported, without Amendment.

Motion made, and Question proposed, That the Bill be now read the Third time.

10.14 p.m.

Mr. Harold Wilson: I certainly do not intend to delay the passage of the Bill, as I made clear last night when the Economic Secretary very wisely and fairly agreed to postpone consideration of the remaining stages of the Bill until this evening. I am certainly also not suggesting to my hon. Friends that they should vote against the Third Reading of the Bill. We had a reasoned Amendment on Second Reading, which was defeated after debate, although we were mostly concerned at that time with the broader issues of convertibility. At the same time, the fact that we are not voting against this Measure should not be misinterpreted.
We recognise that convertibility having been introduced and the European Monetary Agreement having automatically

come into force, it would be irresponsible now to vote against the Bill which provides the statutory backing for the Agreement which is already in force. That does not mean to say that we ourselves feel that this is a wise Bill, or that the introduction of the European Monetary Agreement in succession to the European Payments Union was a wise decision on the part of the Governments of Western Europe in which Her Majesty's Government took, as we understand, a very leading part.
Our concern has been expressed fully and frankly by my right hon. Friend the Leader of the Opposition, both in statements outside the House and on Second Reading. Our main anxiety on the narrower point which is appropriate to Third Reading is the fact that, with the disappearance of the European Payments Union, the virtually automatic credits which were in force under the European Payments Union are no longer available to a debtor country, and, furthermore, that there is no automatic restraint on the activities of a persistent creditor country.
The European Payments Union, the negotiation of which was very largely the work of my right hon. Friend the Leader of the Opposition, provided a 50 per cent. automatic credit—50 per cent. payment in gold and 50 per cent. payment in credit. Thanks to the unwise negotiations of the Lord Privy Seal, when he was Chancellor of the Exchequer, the 50 per cent. gold proportion was raised to 75 per cent., which my right hon. and hon. Friends always thought was an unfortunate and, to some extent, a deflationary decision. We always understood that it was Her Majesty's Government who took the lead in proposing the substitution of 75 per cent. for 50 per cent., though that might be unfair to the Lord Privy Seal. Perhaps he can cast his mind back and tell us whether we are right.
We are well aware that under the European Payments Union some countries have exhausted the credit available to them and that a new arrangement would have had to be made to enable the automatic credits to be continued. I feel that Her Majesty's Government could have taken a more active part in renegotiating the E.P.U. so that the credits could continue and so that restraint on the creditor nations could also have been continued.
Under the European Monetary Agreement, negotiated in those long-far-off days between the Lord Privy Seal's election Budget and his autumn Budget of that year, which must seem a very long time ago to most of us, the only credits available, as far as one can understand from reading the White Paper, are those which are agreed unanimously by the committee of management of the European Monetary Agreement. The Economic Secretary will no doubt correct me if I have misinterpreted that.
The unanimity rule is in force, which means that any deflationist has a veto either on the granting of credit to a country which needs a credit or on the terms on which that credit might be made available. We all know that certain countries in Western Europe are very deflationist in outlook. There are certainly signs that Germany would wish to be in certain circumstances. Moreover, I interpret the emphasis of this new agreement, as compared with the E.P.U., as putting much more power into the hands of the central banks and less directly in the hands of Governments; and almost by definition the European central banks are institutional deflationists who tend to take the usual banker's view about Government activities.
It would be over-dramatic to say that we are now back to the days of Montagu Norman or anything of that kind, but, at any rate, it is a move in that direction, just as convertibility is a move in the direction of the international gold standard. I should like to hear from the Economic Secretary some more reassuring words than we have so far had from him or from the Chancellor suggesting that any country which needs credit to expand its trade will be able to have it without this dead hand of the central hankers of Western Europe.
I do not need to tell the hon. Gentleman, or the Lord Privy Seal, because they both know it very well, that the European Payments Union was the means of facilitating or lubricating a very substantial increase in European trade. The liberalisation, which was first proposed to Western Europe by the Government of this country when the Labour Party was in charge of these things, could not have been undertaken with any confidence by many countries in Europe, at certain times even by ourselves, if it had not been for

the automatic credits provided by the European Payments Union.
Equally, many countries would not have dared to be expansionist in production—knowing that to be expansionist in production leads to an increase in inter national trade, particularly imports—without knowing that any risks they took would be partially insured by the operation of the European Payments Union. That has now gone, we have this European Monetary Agreement in its place, and some of us are extremely anxious about its effects in Europe. In the last few months, we have seen deflationary trends setting in in Europe and although, for obvious reasons, we shall not vote against this Bill, we fear that this Agreement will intensify the tendency towards deflation.
The only thing about which I want to ask the Economic Secretary relates to that article in the Agreement referring to possible action by the United States Government to revalorise the price of gold. There has been much talk about that. One has heard what are, perhaps, ill-informed remarks about devaluation of the dollar, which some equally ill-informed people have taken to mean that the dollar is likely to be devalued in terms of European currency.
Most of us feel that there is a strong case for an increase in the American statutory price of gold. That would automatically revalorise in a favourable direction, the gold holdings of most of the rest of the world, which would be a good thing for this country and also the sterling area, and would also help our gold earnings. What the prospects of that are, one cannot say, the more so as a decision of that kind would be likely to help the Soviet Union, which is a major gold producer. It would, therefore, be regarded as an unpopular suggestion in the United States at present.
Can the Economic Secretary tell the House whether the reason for this reference in the European Monetary Agreement to a revalorisation of gold is merely an automatic piece of drafting, due to the fact that in Article 24—here I speak from memory—the unit of account so called is expressed in terms of a decimal fraction—I think that it goes to eight or nine decimal figures—of a gramme of fine gold, and that a revalorisation of fine gold would lead to a change in that, due to the fact that, really, when they talk of


the unit of account they talk of the dollar?
That may be the situation. The Economic Secretary has, as I have, recently visited China, where he may have found that when they talk of revalorisation they talk in terms of currency units. They express the hope of extending their currency units, and when they are asked what they mean by currency units, they say, rather coyly, that they mean the dollar. Is Article 24 a rather Chinese way of saying that the accounts are to be measured in terms of dollars, but because they do not want to say dollars they talk about grammes of fine gold?
Is that the only reason for this reference to revalorisation, or is it hoped, as some of us do hope, that as a result of pressure by Her Majesty's Government, the South African Government and others, there is an early prospect of the American Government coming to their senses in this matter? There is an important section of the Agreement dealing with this point, and we should like to know from the Economic Secretary—since the Bill is to validate and make effective that European Monetary Agreement—the exact importance to be attached to these references to gold.
Having said that, I repeat that we do not propose to vote against the Bill, although it was right to put on record, as we did in the earlier debate, our anxieties about the way in which this Agreement may work.

10.25 p.m.

Mr. William Shepherd: have listened to the whole of the debate on this Bill and to the reiteration of right hon. and hon. Members opposite on the merits of automatic credits. I think that one ought to register a protest against this point of view, because it is out-moded, as are most of the ideas expressed by the party opposite.
I would not for one moment deny the value of the E.P.U. arrangement in the conditions immediately following the Second World War, and I do not wish to detract one iota from the credit due to right hon. and hon. Gentlemen opposite for the part they played in those arrangements. Nevertheless, we really must try to progress as things move. We cannot stand still and think that, because

the idea was conceived by a right hon. Gentleman opposite, he was a genius and his work must remain for all time.
Economic circumstances change, and certainly the economic circumstances of Europe have changed very considerably since the time when E.P.U. was inaugurated. I am satisfied that it would be utterly wrong for us to pursue a policy of automatic credits, even if we could succeed in persuading the people of Europe to do so. If we had tried to do so and we had succeeded, it would, in my view, have been an utterly wrong arrangement.
What, after all, is the effect of automatic credit arrangements? It is that other people parties to the arrangement are required to underwrite whatever economic policy, whatever profligate policy, another country wishes to pursue. It means that, whatever is done by other parties to the agreement, one has to make good what they have failed to do. We cannot expect that, over a long period of time, anybody should do that. Indeed, I am satisfied that the creditor countries would not stand for it. Even worse is the effect upon the country so aided, If a country is automatically aided, whatever its internal policy is, it will not apply the measures for its own salvation which it ought to be expected to apply.
I am profoundly glad that the Government have been strong enough to stand for this policy of credits based upon the tests of need rather than automatic credits. I am perfectly satisfied that the economic future of Europe would not be aided by a continuation of automatic credits.

10.27 p.m.

Mr. John Cronin: The hon. Member for Cheadle (Mr. Shepherd) has voiced the completely restrictionist point of view. His attitude appears to be that credits should not be available for countries unless they are prepared, at the bidding of other countries involved in completely restrictionist internal policies, to indulge in restricted credit, unemployment and lower production—the same pattern as we have had over the last few years. However, I will not trouble the House with that further tonight. I wish merely to make certain comments on the circumstances of the debate.
It is very unsatisfactory that we have had such a short time to study the White Paper. I know that the Economic Secretary did agree to this debate being brought forward this evening from last night, hut a few hours is a very short time to study such a complex document with its far-reaching possibilities. Another circumstance which surprises me is that the Chancellor of the Exchequer is absent. My right hon. Friend the Member for Huyton (Mr. H. Wilson) did say that he understood that there were good reasons for his absence yesterday evening, and, no doubt, the Economic Secretary will tell us that there are good reasons for his absence now; but it would be an unfortunate precedent if the Chancellor were frequently absent on major occasions such as this when we debate an important fiscal Measure.
To some extent the absence of the Chancellor is made up by the presence of the Lord Privy Seal, who was the principal architect of the European Monetary Agreement. It is a source of pride to him, and he probably has his own opinions about that at present. The right hon. Gentleman the Lord Privy Seal did, on 26th July, 1955, make a statement about the European Monetary Agreement. His words are reported at col. 1025 of HANSARD, but I shall not weary the House by reading the actual passage. The right hon. Gentleman then said that there were three criteria necessary for introducing the European Monetary Agreement, namely, a strong internal position, sufficient world credit available, and a wider trade policy.
Our internal position is that we have 600,000 unemployed. Production is static. Manufacturing and capital investment are going down. The credits available certainly seem rather unsatisfactory, in spite of the increasing quotas of the International Monetary Fund. As regards a wider trade policy, we are shortly to be up against the European Economic Community. We are up against the protectionist barrier of the United States. Obviously, the Greer's Ferry Dam affair is one instance of that. We are having difficulties of our own in the sterling area because other countries are unable to purchase our exports to the amount they wish, and, of course, we are having the same difficulty with the South American countries as we had before—restrictions and embargoes.
It would seem that, going by the criteria of the Lord Privy Seal, this Bill is not having its Third Reading at a very apt time. My right hon. Friend the Member for Huyton dealt with the excellence of the European Payments Union which this Bill is replacing. That body was originally intended to last for two years, but it lasted for eight and a half years. I think that is some indication of the satisfaction that was felt by most of its members. I think it rather unfortunate that it was terminated, because it could only be terminated by members having 50 per cent. of the quotas. That 50 per cent, could only be made up by ourselves. The other countries in favour—Switzerland, Germany, Belgium, Holland and Luxembourg—could not by themselves have made up 50 per cent. of the quota. Therefore, we are entirely responsible for that position.
I wish to put a few points to the Economic Secretary. First, is there any likelihood under the European Monetary Agreement of security sterling becoming transferable? There is now hardly any discount on security sterling as quoted in the free market, and, presumably, exactly the same argument applies for making security sterling convertible as for making transferable sterling convertible. I should like the Government's view on that.
My point is that under Articles 9 to 12 of the European Monetary Agreement, settlements have been made at the extreme ranges of official rates. One gets the impression that they have got automatically to take place at the rate most unfavourable to the initiator of the settlement. That appears to me to have a very deterrent effect on clearances.
Is this agreement really intended to facilitate clearances, because it seems that its purpose is chiefly to drive clearances through the ordinary foreign exchange channels? That, of course, is entirely in keeping with the Government's strong theoretical views on private enterprise, but it has an unfortunate effect on financial payments.
I would also like to ask why Article 10 is so strictly limited. An answer to these few points will be very acceptable to the House. I will not press the matter further in view of the lateness of the hour, but it seems to me that this is a very ill-timed Bill. There is no doubt that convertibility has, through a combination of


circumstances, been quite easily attainable, but the question is whether it is maintainable in the future. The Government have always said that they would defend the £ to the last ditch, but it looks as if the last ditch may be filled with men who are likely to lose their jobs.

10.34 p.m.

Mr. Erroll: I will reply only briefly to the points raised, particularly as the right hon. Member for Huyton (Mr. H. Wilson) appears to be unable to be present to hear the answer to the points which he raised.
I would like to make it plain that while there is a great division between the two sides of the House as to the value of this Measure, we take the view that the new arrangements should prove a strengthening source of credit, more flexible than the automatic credit of the European Payments Union.
It will provide, on a regional scale, a similar type of liquidity to that which we have been working to increase in the wider field of the International Monetary Fund. At the same time, as regards credits—particularly referred to by the right hon. Member for Huyton—the members of O.E.E.C. will be able in each case to decide collectively on the appropriate conditions for the credit to be granted. In addition to that, of course, any individual member country in need of credit will always be able to make a bilateral arrangement with any other European country, or, indeed, any other country in the world, from which it can obtain credit facilities.

Mr. J. Edwards: Are we right in assuming, however, that the granting of the credit will require unanimity on the part of the Council, or is this something that could be settled by the Committee of Management, where the unanimity rule, I understand, does not always apply? If a country wants credit, does this mean that all the contracting parties, through the Council, must agree?

Mr. Erroll: That will depend on circumstances. I do not think it would be

possible to lay down a hard and fast procedure in advance.
In addition to what I have just said about a country being able to obtain a credit on its own initiative from any other country, and in view of the remarks which have been made about how difficult it would be to obtain any credit, I thought that the House would like to know that the Council of the O.E.E.C. has just agreed to the first grants of credit from the new Fund. They will be announced shortly on the recommendations by the Fund's Board of Management on the cases for such assistance which have been put forward by the countries concerned. I am not yet in a position to announce the names of the countries, but this should go some way towards reassuring hon. Members opposite who have raised the question of the difficulty of obtaining credits.
For the reassurance of the House, I would like to make it clear that if any calls should be made on the United Kingdom's contribution before the Bill has received the Royal Assent it is our intention to meet this call temporarily from the resources of the Civil Contingencies Fund. Nevertheless, and quite obviously, the sooner we have express statutory authority, where required, for the necessary transactions under the European Montary Agreement, the better for both this country and for our friends in Europe. I therefore invite the House to accord the Bill a Third Reading.

Mr. H. Wilson: I understand the hon. Gentleman's references to the Civil Contingencies Fund. That is probably normal procedure. Under what Estimates will any expenditure in the present financial year be met? As far as I am aware, it is not in the Supplementary Estimates. From the viewpoint of Estimates procedure, how will this be financed?

Mr. Erroll: We would look into that if it proved necessary to make such arrangements.

Question put and agreed to.

Bill accordingly read the Third time and passed.

GHANA (GIFT OF SPEAKER'S CHAIR)

Mr. Bottomley, Sir Roland Robinson, Mr. Turton, and Mr. Wade to have leave of absence to present, on behalf of this House, a Speaker's Chair to the Parliament of Ghana.—[Mr. R. A. Butler.]

PROMOTION OF PRIVATE BILLS

So much of the Lords Message [3rd February] as relates to the appointment of a Committee on the Promotion of Private Bills to be considered forthwith.—[Mr. Legh.]

So much of the Lords Message considered accordingly.

Select Committee of Seven Members appointed to join with the Committee appointed by the Lords to consider the extent to which proposed Private Bill enactments which would alter the powers or duties of persons other than the promoter should be allowed and to report what, if any, consequential changes should be made in the Standing Orders

governing the practice and procedure of the two Houses of Parliament in regard to Private Bills:

Mr. John Arbuthnot Mr. Ede, Mr. Glenvil Hall, Sir Lionel Heald, Major Legge-Bourke, Mr. Mitchison, and Mr. J. Enoch Powell.

Power to send for persons, papers and records;and to sit notwithstanding any Adjournment of the House:

Three to be the Quorum.—[Mr. Legh.]

Message to the Lords to acquaint them with such of the said Orders as are necessary to be communicated to their Lordships.

EISTEDDFOD [MONEY]

Resolution reported,
That, for the purposes of any Act of this Session to make further provision for contributions by local authorities in Wales (including Monmouthshire) towards the expenses of the Royal National Eisteddfod, it is expedient to authorise the payment out of moneys provided by Parliament of any increase attributable to that Act in the sums payable by way of Rate-deficiency Grant or Exchequer Equalisation Grant under the enactments relating to local government in England and Wales or in Scotland.

Resolution agreed to.

BRITISH MARKETING RESEARCH BUREAU

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooman-White.]

10.40 p.m.

Mr. Speaker: Before I call on the hon. Member for Derbyshire, South-East (Mr. Champion), I ought to say that the subject which he has chosen for this Adjournment puts me and the House in some difficulty. As I informed the hon. Member, it is a rule of the House, as he knows very well, that to be in order a subject to be raised on the Adjournment must relate to some administrative responsibility of the Minister. The Board of Trade has informed me that it is not responsible for the activities of the British Marketing Research Bureau. Therefore, it would not be in order, prima facie.
I may say that I have tried to see whether there is any other Minister within whose Department this subject falls. I have been unable to find any. That is the position. If it is a fact that there is no power to control, or responsibility, existing at the moment. To confer such power would involve legislation, and that would be out of order equally. Nor would asking for an inquiry serve the purpose, if the ultimate remedy of the hon. Member's grievance were legislation.
I thought it right to make that statement, and I ask the hon. Member, before he gets on to the merits of his case, to satisfy me, if he can, that this subject is in order on the Motion for the Adjournment of the House.

10.42 p.m.

Mr. A. J. Champion: In view of your Ruling, Mr. Speaker, I am in some difficulty, but I am grateful to you for the notice you so kindly gave me of your intention and of your own difficulty in this matter.
What I am suggesting to you, Sir, in the first place is that the Chancellor of the Exchequer and the Minister of Power, acting for the nation, have some responsibility for the action of those firms in which the nation has so much money invested—for example, £60 million of the £100 million capital of the Steel Company of Wales and the £50 million which

is to be invested in Messrs. Colvilles, two firms which are responsible for employing this British Market Research Bureau. I am bound to feel that the Ministers I have mentioned have some responsibility in this matter.
The second point I would put to you is that the Chancellor of the Exchequer has a tax responsibility in this matter. Here is a charge upon an industry which properly ranks, or is regarded by some as properly ranking, for legitimate tax remission. This is a matter which, I understand, will be raised tomorrow as a result of Questions. Clearly a number of Members of the House feel that here is something for which the Chancellor of the Exchequer has a quite clear responsibility.
The third point I would put to you, Mr. Speaker, is this. The President of the Board of Trade, as I understand it, has responsibility under the Companies Act, 1948, for appointing inspectors to investigate the affairs of any company to ascertain, among other things, if it has given all the information with respect to its affairs which they may reasonably expect.
What I was hoping to do was to ask the President of the Board of Trade to inquire of his Ministerial colleagues if they were informed of the decision of the Steel Company of Wales and Messrs. Colvilles to use their funds for what are clearly political purposes. If not, ought not the President of the Board of Trade to appoint a competent inspector to inquire into the affairs of the company?
As I understand it, Section 165 of the Companies Act clearly places the duty upon the Minister to act in certain cases, and I believe that this is one of the cases in which the President of the Board of Trade should appoint an inspector to inquire not only into the company concerned, but into all companies which are related to this matter which I hope to raise on the Adjournment tonight.
The last point which I shall put to you, Mr. Speaker, as a reason why I should be permitted to raise this matter on behalf of my constituents—because that is where the matter started, in letters to me from my constituents—is that some of the persons who had been


acting as interviewers told the people interviewed that this matter is related to Ministry of Labour inquiries. I do not put too much stress on that last point, but the other points which I have raised appear to me to justify my being permitted to make the points which I would seek to make on behalf of my constituents.
As you probably know, Mr. Speaker, I started to ballot for the Adjournment before I realised that there might be a bit of a political schemozzle about this matter. Perhaps I am a little bit of a political innocent abroad and did not realise its political implications, but the fact is that I wished to raise the matter as a result of letters from my constituents, one of which stated the matter so clearly that I proposed to start my speech by reading it.

Mr. Speaker: I have great sympathy with the hon. Member and quite accept his argument that he is raising this as a matter of interest to his constituents. I have no doubt that is so, but my trouble is this. First of all, as regards the Chancellor of the Exchequer, it is true, as the hon. Member said, that there are Questions down for answer tomorrow as to what, if any, allowance will be made for the cost of this inquiry as a legitimate charge on the profits of the company. But that is a separate matter altogether. It does not concern the activities of this bureau, of which the hon. Member gave notice, and that no doubt will be the answer by the Chancellor of the Exchequer tomorrow.
As regards the Board of Trade and its inquiries, my recollection of the Companies Act—though I stand ready to be corrected—is that that applies in the case of some financial irregularity, when the shareholders can petition and so on to get an inquiry into the affairs of the company. I doubt whether that covers the activities of this bureau. I suppose it is a company which exists for the purpose of carrying out market research.
As to the third part about the Ministry of Labour, I do not think the fact that some of the interviewers on behalf of this 'bureau have represented themselves as Ministry of Labour officials when in fact they were not, or as acting on behalf of the Ministry of Labour when they were

not, places any responsibility on the Ministry of Labour. I am afraid that I am not convinced yet about it.

Mr. Champion: Would you reply, Mr. Speaker, to the point I made about the Chancellor of the Exchequer and the Minister of Power by reason of the fact that large sums of public money are invested in these concerns?

Mr. Speaker: I am grateful to the hon. Member for reminding me. That had occurred to me. In order to try to assist the hon. Member to get his Motion discussed, I asked the Treasury if they had any responsibility in this matter. They assured me not. I have to take their paint of view on it, because they know their responsibilities better than I do; and I doubt whether loans and subscriptions to capital, which Governments of both parties have made from time to time to assist these enterprises, give them any direction over this matter. I do not know, but I should not think so.

Mr. Eric Fletcher: May I suggest to you, Mr. Speaker, that in addition to the Ministries mentioned by my hon. Friend the Member for Derbyshire, South-East (Mr. Champion), which he thought might have some responsibility but which, for the reasons you gave, you thought did not have responsibility, it is likely that the Home Secretary is responsible in this matter? I am very glad, and it may be that it is because he feels that he has some responsibility, that the right hon. Gentleman is present tonight. We all know that the Home Secretary and Leader of the House is a very conscientious person, and I am sure that if he felt that there was even a prima facie case for answering the case, which I hope my hon. Friend will have the opportunity of putting, he would feel it his duty as Home Secretary to deal with it.
I am in the difficulty that I do not know the burden of the ease which my hon. Friend intends to put, but I have seen, as no doubt you and other hon. Members have seen, an important letter in The Times of today, which deals with the subject and which is written by a professor of the London School of Economics who received one of the questionnaires or had a visit from this research bureau.
In his letter, he sets out what I regard as some very disquieting facts about the activities of this bureau. If they are right, they seem to me to raise matters of far-reaching constitutional importance—matters which the Home Secretary should certainly look into, both because of his responsibilities in regard to the criminal law and because of his over-riding duties as the Minister responsible for the operation of the Representation of the People Acts.
As we understand it, what is taking place in these marginal constituencies is something which may be said almost to transgress the rights of Parliament in regard to the holding of miniature elections, ballots and other tests of public opinion. The gravamen of the allegations contained in Professor Coleman's letter is that he says that on this occasion, when public opinion is being tested on a large scale, unlike the other kinds of Gallup poll with which we are familiar, individuals are not only being asked to give answers to specific questions, but are also being asked to record their names and the party for which they vote. I gather that in some cases the electoral number is also given.
What is most disturbing is that Professor Coleman says:
The secret ballot"—
which we have cherished for a long time—
is aimed at preventing the juxtaposition of these items of information. Is not Mr. Hurry arrogating to himself a quite remarkable degree of authority in saying that when the names have been left with him 'what happens to them will be for me to decide as I think proper'?".
The suggestion is that at Mr. Hurry's option this information may or may not be communicated to one or other of the political parties, or withheld. If that be the case, serious questions may well arise as to how far that is testing public opinion. The subsequent communication of this investigation to one or other of the political parties may or may not involve questions about electoral expenses and so on. I venture to suggest that, quite apart from the arguments raised by my hon. Friend, there are matters of grave political importance involved in the activities of this bureau which certainly call for some kind of reply from the Home Secretary.

Mr. Speaker: It occurred to me that possibly there was some oblique duty with regard to the Representation of the People Acts. I inquired into that, but I found that the Home Office had no responsibility in the matter. What use may be made of these results when they are ultimately collected must be hypothetical in the meantime. The position at the moment, as I understand it, and I am open to correction, is that these people are not under the control of any Ministry. I believe they carry out same quite useful work as well as what the hon. Member regards as not so useful work. However, in this country many people employ their money in ways of which the rest of the community disapprove. That is not to say that there is Ministerial responsibility for controlling or checking them in the way they spend their money. That is the position as I see it. It seems to be an action entirely by them.

Mr. Jack Jones: I do not want to go over the ground already covered by my hon. Friend the Member for Derbyshire, South-East (Mr. Champion), but a very important question arises. It is public knowledge, and has been acknowledged by certain steel firms, that they are interested in this job and are backing this venture with a tremendous amount of money. That is well known and acknowledged.
I wish to ask a pointed question to the representative of the Treasury. In the event of my union putting £12,000 at the disposal of candidates in certain constituencies where steel is involved, will that go against the candidates' expenditure in those particular constituencies?

Mr. Speaker: That is not relevant to our particular inquiry, which is whether the activities of this research bureau are relevant to the activities of any Minister.

Mr. Frederick Mulley: I wanted to raise a wider question than the several points of detail which have been put forcibly.
It seems to me, Mr. Speaker, that you are put in a most difficult position if you have to be the spokesman for the Government in giving reasons why they have no responsibility in this matter. One understands that obviously the Adjournment cannot be used as a means for raising a subject on which on the surface there is clearly no Ministerial responsibility, but I should have thought that if


an hon. Member can make a prima facie case it should be possible for him to make his remarks and the responsibility for responding and saying that a particular Section of an Act does not apply should be that of a Minister. I suggest that if every time an hon. Member puts down a subject for the Adjournment you have to go to four or five Ministries to find out whether they deal with these controversial matters is something which should be looked into in future.

Mr. Speaker: Of course, I have my duty to do in the House, and that is to prevent breaches of the rules of order. When I see a subject down for the Adjournment and it strikes me that there is some doubt about Ministerial responsibility, I feel it my duty to the House to inquire so that the House should not be misled into a breach of order through my ignorance. I have made the usual inquiries in this case, and the replies are entirely negative. That is the position as I know it, and I have heard nothing which convinces me that there is Ministerial responsibility for the activities of this bureau.

Mr. Harold Wilson: Further to that point of order. Surely the Home Secretary has responsibility for the printing, distribution and dissemination of electoral registers under a Vote of this House; indeed, that is financed by moneys provided by this House. I think there can be little doubt that the most serious misuse is being made of those electoral registers by these people. They are using them for purposes of identifying electors, canvassing their political views and the views of their wives, asking how they intend to vote and how every member of their family intends to vote. As my hon. Friend the Member for Islington, East (Mr. E. Fletcher) said, this is contrary to the purposes of the Secret Ballot Act, 1872.

Sir Hugh Lucas-Tooth: Can the right hon. Member assure the House that he has not got a copy of the electoral register for his own constituency in his constituency office? If he has not, he is a very exceptional right hon. Member.

Mr. Wilson: Indeed I have, and I hope the hon. Member for Hendon, South (Sir H. Lucas-Tooth) has one for his constituency.

Sir H. Lucas-Tooth: Is it marked?

Mr. Wilson: I wish it were. In the discharge of my Parliamentary duties, when I receive a letter from a constituent and the signature is almost indecipherable I use the register, as one does not wish to insult a constituent by giving him a wrong name. Therefore, I look up the electoral register.
The purpose of my hon. Friend's Adjournment debate was to draw attention to a very serious misuse of these electoral registers for the purpose of asking the interviewee, if I can use that rather unpleasant word, not only how he intends to vote but also how every other member of the family intends to vote. Although it may be argued, and probably will be argued, that what happens to the electoral registers when the Home Secretary has issued them is not a matter of responsibility for him, I remember that Ministerial responsibility has been acknowledged in the House in similar circumstances, for example, in the sale of surplus military equipment by the Ministry of Supply. It might well be said that the Minister was not responsible for the firms which obtained this military equipment, but nevertheless Questions have been put and the matter has been debated when goods supplied by the Government Department have subsequently been misused.
I suggest that this is an exact parallel, and that when the Home Secretary was entrusted by the House with the issue of electoral registers, he was not authorised to enable them to be used for the kind of unscrupulous purposes for which they are being used.

Sir Spencer Summers: I had not intended to intervene in the debate until the right hon. Member for Huyton (Mr. Wilson)—

Mr. Wilson: On a point of order. Is this a debate? I thought I raised a point of order.

Mr. Speaker: It began as a matter of order, but so many extraneous considerations have reached my ear apart from the matter of order that I was beginning to wonder what had happened. I ask the hon. Member for Aylesbury (Sir S. Summers), if he is called, to address himself to the point whether there is or is not


any Ministerial responsibility in the question which the hon. Member for Derbyshire, South-Eeast (Mr. Champion) wishes to raise.

Sir S. Summers: It was my full intention to deal with the point of order which is the subject of submission to you, Mr. Speaker.
I had not intended to take part in the discussion until the right hon. Gentleman referred to the use which is made of the electoral rolls. It is customary in the House that if one has an interest to declare, one should declare it. I must acknowledge that I am concerned professionally in advertising and that it is our business to make use of the electoral roll.
It is suggested that the Home Secretary has some responsibility in this context because of the alleged misuse of electoral rolls published under the authority of his Department. In our business —and this applies to others in the direct mail business—we constantly, with the knowledge and approval of our clients, use the information contained in the electoral rolls published by my right hon. Friend's Department. If it is suggested that my right hon. Friend's responsibility goes so far as to see whether we use or misuse the information which he provides, then his authority will go far beyond its use by this market research bureau. It will go right into all advertising business, direct and otherwise, which is in the habit of making use of that information. If that is to be the case, it will be of great interest to the advertising world to know how far the Home Secretary's writ runs.

Mr. James Griffiths: There is one point, Mr. Speaker, on which you have not yet given your views. I understand that my hon. Friend the Member for Derbyshire, South-East (Mr. Champion) said that he gave notice to raise this matter some time ago, long before some of this nonsense had begun, and that he had done it because constituents had written to him and complained that certain people had called upon them representing themselves as the representatives of the Ministry of Labour.
Traditionally, the Adjournment is an occasion upon which private Members can raise the grievances of their constituents. Is not the Home Secretary

responsible for the good conduct of people in this country and for dealing with the grievances of people who feel that they have been imposed upon by false representation? Is not my hon. Friend entitled, therefore, to put the grievances of his constituents to the House and to ask the Home Secretary to take appropriate action to defend his constituents?

Mr. Speaker: It is true that the Home Secretary has a general supervision over law and order, but he acts through certain well known organs to secure that end. I do not know that the Home Secretary, for example, could be made the subject of a debate on the Adjournment because someone does something wrong in the country. We could be stretching his Ministerial responsibility beyond the proper limit. My advice to the hon. Member for Derbyshire, South-East is that the subject he wishes to raise would be perfectly proper on a Motion, framed in proper terms, but I do not think it would be in accordance with my duty to allow it on the Adjournment, for the reasons I have stated. I do not see any Ministerial responsibility for the activities of the British Market Research Bureau.

Mr. Champion: Quite clearly, I must accept your very wise suggestion in this matter, Mr. Speaker. I am bound to say that I can understand the Government and the Ministers not wishing to accept responsibility—

Hon. Members: Withdraw.

Mr. Champion: I can well understand why the Government and the Ministers did not wish to accept responsibility for what is clearly a squalid political manoeuvre.

Mr. Speaker: I ought to say in fairness to both sides that I have received no representations whatever on this matter from the Government or from anyone else. I have acted entirely on my own responsibility, and I hope that the hon. Member does not think it is because someone finds it inconvenient that I have stopped it. It is my duty to uphold the rules of the House.

Mr. F. H. Hayman: Might I ask for your guidance, Mr. Speaker, since one of these interviewers told a constituent of mine that the Ministry of Labour supported the


inquiry and the Minister would issue a White Paper? Could I put a question to the Minister, asking him whether he gave authority for that, and, secondly, might I ask a question of the Home Secretary on the point of a firm helping to finance this inquiry having one of its directors as a member, or an officer, of the Conservative Party in the constituency where this investigation is being made?

Mr. Speaker: If the hon. Member took responsibility for the statement which he has just made and asked the question, "Was it by his authority that this canvasser represented himself as having the authority of the Minister of Labour?" certainly that would be a proper question to put down for answer.

Mr. Mulley: With respect, Mr. Speaker, if it is in order because legislation is not involved, surely that part of the activity of the British Market Research Bureau could be a proper subject for this Adjournment debate? Since we did not have the benefit of hearing my hon. Friend's speech, it might well be that he would have dealt with this point had he been allowed to continue.

Mr. Speaker: The man might not have been telling the truth. I believe that canvassers of all sorts—of vacuum cleaners and other things—frequently represent themselves as having gifts, aptitudes and authorities which they do not possess.

Mr. Mulley: But the important point concerns the rights of hon. Members to raise matters. Are we to understand that before an hon. Member can raise a matter of this sort, not only has he to convince you that he has received the letter which appertains to the activities of the Department concerned, but you also have to be satisfied that the letter is true and that the person writing it is stating the true facts? I thought that the whole point of an hon. Member raising a matter was that he stood by that and he did not have to get an affidavit in advance in order to put down a question or raise the matter on the Adjournment. Are we not going a long way towards invading the traditional rights of hon. Members?

Mr. Speaker: The rules of Questions and those for the Adjournment are quite different. The hon. Member is entitled to ask any proper question, but on the Adjournment the rule is plain: there must be Ministerial responsibility for the subject raised. I have no power to alter the rule, and I am as much bound by it as are hon. Members.

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at ten minutes past Eleven o'clock.